About Fraction Protocol
The Fraction Protocol is a comprehensive solution designed to enable individuals and businesses to fractionalize their valuable assets into tokens, which can then be sold to interested buyers on the blockchain. In this case, the assets can be divided into two categories:
- Real world assets - Tangible or physical items like real estate, commodities, businesses, artwork, factories, vehicles, collectibles and others.
- Virtual assets - Cryptocurrencies, NFTs, in-game items, digital art, domain names, licenses, online collectibles and intellectual property and other types of virtual assets.
The fractionalization process involves dividing an asset into a set number of units (fractions), each represented as a token on the blockchain. These tokens can be transferred and utilized either as a utility or they can be a store of value, depending on the use-case. Below you can see the fractionalization and the token sale process:
Fractions can also be represented as shares, where each share is a percentage of the total asset, allowing multiple buyers
to own a portion of the asset proportional to their investment. For instance, in the diagram above, fraction_#1 and
fraction_#2, owned by user_#1, constitute 66.66% of the total number of issued fractions.
The fractionalization of valuable assets is carried out through Fraction platforms. Each platform is built using the Fraction Protocol, which consists of a set of predeployed smart contracts that function as a framework for creating customized platforms with the desired features. The process of creating a customized platform involves deploying a diamond proxy smart contract, registering the selected facets, and initializing the diamond's storage. Once this is done, the platform is ready to support the creation of sales.
Each sale follows the platform's rules, which are established by the administrator. However, the creator of a sale defines its specific parameters, such as the number of fractions, their price, and their utility. These configurations must align with the platform's general guidelines. For instance, while the platform may permit only non-perpetual sales where fractionalized assets can be bought, the creator is responsible for setting the start and end timestamps for their sale.
At this stage, the following definitions must be introduced:
- Fraction Platform: Represents a diamond proxy that relays function calls to a set of smart contracts (facets), each containing unique functions required for fractionalizing assets and running sales.
- Sale: Each sale follows the platform's rules, with the issuer configuring settings such as the number of issued fractions, eligibility criteria, and other parameters.
- Administrator: A company that oversees the Fraction Platform.
- Eligible Issuer: A user who can create and manage the sale where assets are fractionalized and sold to buyers.
- Eligible User: A user who can only participate in the sale where they can purchase fractions.