Using NFT Fractionalisation to allow users to jointly buy land or have a share in other Land Owned

Summary

The fictionalization of NFTs is currently being used on alot of newer marketplaces like Fractional which enables an erc721 token to be split into several erc20 tokens to increase the liquidity of the item and allow for sale on secondary markets.

Enabling the fictionalization of land parcels would allow people to buy fractions of parcels “sub parcels” allowing land parcels to become more liquid as the cost of a fraction of parcel would be cheaper than the full parcel

Decentraland users could buy land cooperatively, meaning in conjunction with one another. Seen as Parcels are 16 x 16 effectively there could be 256 owners of one land parcel spreading the cost of purchasing to an absolute minimum and giving players to option to co own the land during the purchasing process and not be assigned afterwards.

These sub parcels are erc20 tokens wrapped inside the existing land NFT. Users exchange (x) amount of MANA for (x) amount of erc20 tokens representing their parcel. This can be held as a stake in the parcel or sold on exchanges, just like regular land.

In addition, fractionalising LAND would be great for proerty investors or developers who are pooling together to buy LAND, as right now if a land price goes up due to sudden surge in the markets it can become a barrier to entry for users who wish to invest in land to further develop the Decentraland platform.

Having sub parcels with a fixed price would allow property investors to buy land together and reap the benefits when the land goes up in value. This value would be shared among fraction holders when the parcel is sold.

Developers could pool together or receive a grant from the DAO to build on the land grants. The DAO uses the grant money to buy 10 - 50% of the parcels and then the developers buy the rest. The DAO then can take profits from their shares in the land when it goes up in value due to what the developers have built.

Hello. I have a few thoughts regarding this post…if this is not the appropriate response format, accept my apologies (and kindly provide a link or basic instructions).

In my opinion there are many problems with parcel fractionalization: 1. It would dramatically clutter the marketplace by presenting exponentially-increased land offerings. 2. The secondary market would also see a massive increase in offerings, which would clutter and possibly confuse potential buyers. 3. Fractionalization would decrease the available land for sole-ownership. Here is a potential scenario: a first-time, crypto-savvy buyer spots a parcel on the secondary market that would give him great Decentraland neighbors (Rarible, Metaverse Motors, and NFT Plazas, let’s say). He has his own crypto start-up, and believes he can use this DCL address to great benefit, business-wise. However, upon attempting to purchase, he sees that this parcel has been reserved for fractional ownership only. Potential scenario #2: An owner wants to expand his or her land, and sees an adjacent parcel at an affordable price on the market. However, the owner sees that this parcel is only available fractionalized. He or she resents this, as it has taken a long time to find an adjacent parcel that is both for sale AND in his or her price-range. Unfortunately I think these are just a few of the many poor situations that would arise from fractionalized land-ownership. I believe a better alternative is joint-ownership. As a sole owner of a few parcels, I would be very willing to also participate in joint-ownership of a parcel or estate, a thing easily facilitated through a Discord room or even a special Decentraland page dedicated to this. Joint-ownership could be encouraged, and even awarded to hopeful land-owners, through creative challenges (even game prizes). Regarding maximum ownership, 256 owners of the same parcel would prove excessively problematic. Rather than multiples, my suggested ‘owner ceiling’ is simply dictated by the parcel itself: no more than 16 different joint owners.

I’d like to close by saying thank you to the author of the proposal for fractionalized parcels. I believe multi-ownership of land - if done right - might just be a first in the metaverse, and a way for financially-struggling supporters of Decentraland and Web 3.0 to get a foot in the digital door.

gIII

Replying to Scenraio One,

I think that it would not clutter if done correctly, for example the market would not show individual fractions on the marketplace but full pieces of land, with the amount of fractions that has been bought leaving the remaining for sale.

The secondary market for this would also be displayed with in the same parcel listing as the owner of the sub parcel would then list it for sale within the main parcel listing meaning that adding fractionalistion to the UI does not rquire a change in the marketplace but a change within how fracitions are represented on the whole parcel listing.

For the crypto savvy guy, his problem with purchasing a full parcel because it is fractionalised wont get in the way as the sum of all the sub parcels is the same as the parcel itself. So if he can afford the full parcel amount he effectively has bought all the sub parcels too. If he chooses to sell some parcels to a new or current business parter in exchange for joint owner ship in the buisiness he/she can do that.

This method of joint ownership can happen on the sale of the parcel as well, meaning that two or more users can come together to split the land 50:50 thus allowing the amount of sub parcels a business partner owns equaling the amount of shares they have withing the property. The more shares they have the more control they have and higher returns they will get once the parcel is sold or the business on the parcel is sold.

Also, this would make investing in large businesses like rarible and Atari easier as these crypto giants could sell parcels to the users of decentraland to eable them to have a “share” in their business. This would essentially become like a stock market or Initial Public Offering. Depending on the company as sub parcel could reprensent a certain amount of shares in the company this decreasing when more land is bought and increasing when the company only has 1 - 2 plots.

In addition, when I said 16 * 16 would mean there would be 256 owners it was an example and as illustrated above, a person can own more than one subparcel to have a share in property / business.

This is a really complicated proposal…
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Any fractionalization or joint ownership arrangement need to to include how to manage UpdateManager and UpdateOperator wallets, or the land won’t have content or the ability to improve it. We sure don’t want to encourage land speculation that actually prevents land decoration.

Was thinking of doing this via a multisig shared wallet so everyone on the land has to approve the selling of new parcels.

For example, if 4 people jointly own a parcel thats 64 parcels each, now depending what they do with the land would determine if the price goes up or down. Lets say it goes up then each parcel is worth more than it was previously like a share.

If a joint owner wants to, “take their winnings”, then this would have to be approved by the multisig wallet, essentially making joint landowners a DAO within itself as land owners can vote/ approve what is done within their set of parcels which are jointly owned by them.

so how would you envision deployment of content to the shared land?
the appointment of an operator through a multisig transaction by shared owners?
By the way, getting many people to participate in a tx and unanimously approving it is rarely successful