Security

How are NFTs stored and kept safe?

NFT Security:

All NFTs held by the Fractional protocol are custodied in the protocol smart contracts. They can only be withdrawn in the case of a buyout auction or if a user has accumulated 100% of the total supply of the token. This is to make sure that there is no situation in which the NFT can be withdrawn from the platform unless through a planned withdraw.

Buyout:

Token holders have the ability to continuously vote on a reserve price. The weighted average of this vote decides on the price needed to initiate a buyout. Alongside the reserve price, a buyout is also limited by a minimum quorum of token voters. This quorum is set by governance.

A buyout can happen when there is an external party who deposited ETH that is greater than or equal to the reserve price after a minimum percentage of token holders have voted on the reserve price. This will kick off an auction. At auction completion, the NFT will be withdrawn and fractional owners will be able to trade in their tokens for ETH.

Governance:

Token governance's primary focus is in creating safeguards for the system to allow for fractional owners to hold their tokens in peace. This is primarily through finding edge cases in the ownership models and working through different griefing vectors and then eliminating those through settings, variable caps and governance upgrades. Some examples here are capping curator fees, setting a minimum auction length or in serious cases kicking a curator from their role.