Fine Art Fractionalization: A New, Broader Generation of Art Collectors

September 16, 2021

## Decoding the Fine Art Industry and the World of Fractionalization

There is a story behind every work of art, a creative vision that defines each masterpiece. The freedom of a

contemporary artist to distill a lifetime of experience into a single work of abstractions and allusions transcends

the concept of boundaries altogether and provides tangible proof of humankind’s creativity as its greatest asset.

## The Contemporary Art Boom

The contemporary art market continues to boom, reaching a record number of transactions during 2020 lockdowns. Now,

with 13% of the entire secondary art market depending on works made after 2000, new artists have fetched nearly as

much as eight times the estimate of their highly desirable works of art in recent sales.

Similarly, the Citi Global Art Market chart reported that contemporary art masterpieces outperformed the S&P 500 over

the last 25 years. As of December 2020, masterpieces offered an annual return of 14%. The S&P 500 has provided a 9.5%

return. This is coupled with the fact that contemporary art has not seen nearly as many stages of significant decline

as other asset classes like global equities, gold or the U.S. housing market.

## Restricting the Once Unrestricted

Given contemporary art’s imaginative prevailing tendencies, it is nevertheless surprising to note the restricted

access that frames the global art market. For example, the collection of blue-chip art pieces has traditionally been

reserved for billionaires. In fact, five of the top collectors in the industry control assets totaling over $11

billion, according to Widewalls. Additionally, the art market has notoriously struggled with liquidity constraints,

which has since translated to the NFT market.

As of Q2 2021, the NFT art segment liquidity rate was 0.56%, according to Nonfungible’s Quarterly Report. They

calculate this indicator by “dividing the volume of unique assets that have been traded on the Secondary Market, with

the total supply available for each type of asset.”

As Consensys reported in their Q4 2020 DeFi report: “One of the greatest impediments to NFTs right now, at least in

the world of crypto, is lack of liquidity and the ability to earn an ROI on your NFT without selling it. As DeFi has

proven, the crypto investors prize liquidity and desire yield. Yet how can there be liquidity for an asset that is

non-fungible? It’s not like there is a constant market for people who want to buy and sell expensive works of art.”

## Free the World of Art: Linking the Physical and Digital

To continue on its growth trajectory, the art industry faces three primary challenges:

* Creating greater access within online marketplaces

* Lowering the purchase threshold for valuable works of art

* Linking physical works of art to digital certificates.

ORIGYN Art’s integrated platform allows collectors, artists, galleries and auction houses to certify and fractionalize

highly desirable physical works of art in order to resolve these challenges.

This process begins with a digital twin, which is a virtual duplicate of the authenticated physical work. This becomes

the starting point for owners to fractionalize their art for sale on an open market.

Initial owners of a physical art piece can determine the percentage of the artwork they would like to sell, offering

instant access to a large collector’s base within a single piece of work. It is also the basis for buyers to confirm

the authenticity of these select works. Contemporary masterpieces from world-renowned painters and artists will always

provide vital benchmarks both for art history and the economics of art collecting. However, it is truly the power of

fractionalization that democratizes art of all kinds, bringing it to a broader audience and setting the course for an

art market for centuries that have yet to come.