Tessera is a protocol that allows NFTs to be shared owned and governed. When an NFT is added in a vault, the newly minted tokens function as regular ERC-20 or ERC-1155 tokens which govern the non-custodial Vault containing the NFT(s).
In the summer of 2022, the collectively owned platform NFT Fractional closed its Series A under Paradigm and is rebranded as Tessera.
Fractional NFT Ownership
Tessera makes it easy to buy and own a percentage of NFTs. This will allow users to purchase a portion of expensive works. In addition, fractionalization will allow the creator to get some liquidity from their asset without selling it outright.
There are several reasons why an NFT owner may want to fractionalize their asset.
- Price discovery. Fractionalizing and selling 20% into the market can be a valuable tool to help understand how the market values NFTs.
- Liquidity. Owners have significantly better liquidity on exit than if they owned the NFT themselves. This can be achieved through the use of DEX such as Uniswap.
- Curator Fees. NFT owners who have locked their assets receive curator fees. These fees are set by the NFT owner, but are regulated by governance to ensure that fees are not excessively high. Curator fees are similar to asset management fees. Each year, the curator receives a percentage of the fraction's total supply. This allows properties to be unlocked for their NFT.
Once a user owns a share of an NFT, they are entitled to vote for the reserve price of the asset.
The reserve price is the price in ETH that a third party must offer in order to initiate an auction for the entire NFT.
The reserve price of a new fractional ownership token collector defaults to the current reserve price, but can be changed at any time. Upon completion of a successful auction, all fraction owners will be able to cash out their fractions for ETH on a pro-rata basis. At any time, fractions are normal functioning ERC20 tokens and can be used as such.
NFT vaults
Along with individual NFTs, users will be able to fractionalize entire collections and release them under collection-specific fractional ownership tokens (referred to as fractions). This will allow users to enjoy learning and participating in NFT ownership through the knowledge of experienced NFT collectors, while they can collect fractions from their curated vaults.
In Tessera you as an NFT owner will be able to mint NFT Vault. This vault will take over the storage of your NFT, and in exchange will give you 100% of the fraction ownership tokens. At this point, the NFT owner can do whatever they want with the fractions they have. For example, they can sell them in a Dutch auction, add liquidity to Uniswap, or simply gift them to friends. Fraction owners retain collective ownership of the locked NFT. If a buyer appears, they can send ETH equal to or greater than the reserve price of the asset. This initiates an auction. At the end of the auction, the winner of the auction will receive the NFT, and fraction owners can claim the ETH paid.
After the rebranding, the fractions that represent governance and ownership of the vaulted NFT became known as Rae and tokenized as ERC1155 NFTs
A Rae, short for the plural form of Tessera (Tesserae)
