NFTs tokenization explained

Back in early March, we introduced the idea of fractional ownership of the NFTs. If you need a reminder, NFT stands for a non-fungible token, a special type of the non-mutually interchangeable cryptographic token. Recently, they became increasingly popular among the crypto users with the events such as Twitter’s CEO offering to convert his first tweet into the NFT and Injective Protocol’s purchase and subsequent burning of the Banksy’s painting hyping them up.

Our idea was to enable the joint ownership of the NFTs via our Tokenized Vaults, inspired by the concept of fractional ownership of art. If you are interested in specifics, please consult our previous article. This time, we will dive into the distribution of ownership of the NFTs and explain how it combines with the existing model of the APYSwap’s Tokenized Vaults.

So, how exactly can we tokenize the NFTs? At first, a vault will be created, where the NFT will be stored. NFT Mint is a service, which allows minting the smart contract for the NFT and transferring it to the vault’s address. The NFT will then be tokenized to issue ERC20 tokens, which are going to represent a share of its ownership. These tokens will be distributed between our holders.

The NFT cannot be withdrawn from the vault, however, it can be sold on the on-chain marketplace for NFTs (we will create our own prototype of the marketplace). A person responsible for selling it at the market would be a designated Vault Manager. Vault Manager will have the right to sell the token, but he will be unable to transfer it. When the NFT is sold at the marketplace, funds will be credited to the vault. Shareholders will then be able to claim the percentage of these funds and withdraw the USDT, depending on their current share of ownership. Ownership tokens will be burned after withdrawal.


Please keep in mind that this is only a proof of concept. However, it is true that there are some vulnerabilities and potential for abuse within this system. We are aware that a Vault Manager, acting in bad faith, may decide to sell the NFT at the marketplace to himself at a lower price and profit from this transaction, while the shareholders suffer as a result. We are working on patching every potential exploit and vulnerability and it remains a work in progress.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store