Fractionalization: Bring low-cost investment to all with Katon.io.
Fancying Art? 🖼 Collectibles? 👾 Luxury? 👜 Real Estate? 🏡 Do you believe in the potential but can’t afford it due to high buy-in prices? 💰 Don’t worry! Those days will soon be gone thanks to Katon.io.
Or maybe you work in one of these industries and are looking to attract more buyers, and investors, while creating new revenue streams. 📈 This post is just what you need!
Bring investment to the masses
For the majority of people, investing in art, collectibles, luxury product or real estate is pure fiction. Makes sense, who has $50K to spare for a painting, a bottle of wine, or a watch?
The Art & Luxury market is more stable than the stock market and offers similar to better returns on investment.
There is a real opportunity for people to create passive income if we are able to lower the cost of investment. That is where fractionalization comes in handy.
What is fractionalization?
Fractionalization is the process of dividing an asset into smaller units, making it more accessible for investors who may not have the financial means to purchase the entire asset.
Property is shared between investors owning “fragments” of the asset. A fragment is equivalent to a share of a company in the stock market.
Example: The $1M painting. The artist fractionalizes the art piece into 100K fragments. Owning 50K fragments means owning 50% of the painting’s property.
Fractionalizing artwork, collectibles, or luxury products lowers the cost of investing thus attracting more people. If we take the example above, the minimum investment is $1M / 100K = $10.
Several companies such as Bricks do it with real estate, and it is a tremendous success, thousands if not hundreds of thousands of people invest for each asset. Crowdfunding is usually done within minutes of the release.
For the luxury and art industry, this means that expensive assets such as high-end watches, rare artwork, or even property can be divided into smaller units and sold to investors at a much lower cost than buying the entire asset outright. By reducing the barrier to entry for investors, fractionalization can democratize access to these high-value assets and enable more people to participate in the investment and ownership of them.
Security & Transparency
Blockchain technology provides security. This means that investors can be sure that their investment is verified and secure on a decentralized network, without relying on intermediaries such as banks or brokers.
Furthermore, the technology allows for greater transparency and accountability in the ownership and sale of assets. Investors can see the ownership history and provenance of the assets, giving them greater confidence in their investment.
New Revenue Streams
The underlying Web3 technology enables these fractionalized assets to be traded globally, 24/7, and with little to no transaction fees. This creates a more efficient market and provides liquidity to investors who may need to sell their fragments quickly.
Low-cost investment as mentioned above also allows for reaching a wider community of investors.
By design, all subsequent sales, regardless of where they occur (what marketplace) generate royalties to automatically remunerate the artist.
Artists earn perpetual royalties for their work.
If we continue with the example described above, with a standard 3% royalties on subsequent sales:
- If the painting keeps the same value ($1M) each $10 fragment sale will reward $0.3 to the artist.
- If the painting’s value doubles ($2M), each fragment is now worth $20, and thus each sale will reward $0.6 to the artist.
- Even if the value decreases, the artist earns royalties on each subsequent sale.
Fractionalization is also a great way to fund the expansion of a project, a gallery, or a museum. Indeed, one could fractionalize a painting they own, and make 49% of the supply available for investment. It has major upsides:
- Raising funds ($490K in the example above).
- Keep control of the artwork by owning the majority of fragments (51%).
- Earn royalties on subsequent sales for perpetuity.
Why use Katon.io?
Developing a marketplace, issuing crypto-assets… We do it all for you. One can fractionalize and sell an asset within minutes on our platform. They live in a high-end ecosystem offering larger visibility thanks to our community of investors.
Thank you for your support! Stay tuned for more! 🔥
More about Katon.io
Katon.io is a community-driven ecosystem helping companies build decentralized apps/reward systems within minutes.
Adopt and grow, live to earn.
Mass adoption is the next step of web3. Rewards are the perfect medium to onboard the next billion people. It enables companies to effortlessly create and give users valuable and transferable assets while earning royalties for perpetuity. 😮