Paradigm-Backed NFT Ownership Platform Tessera is Shutting Down
Tessera, a protocol that aimed to enable collective ownership and governance of non-fungible tokens (NFTs), has announced that it will be winding down its operations over the next few weeks. This news was shared by co-founder Andy Chorlian in a tweet on Friday. Chorlian co-founded the company alongside Nejc Krajnik in 2021, and the decision to shut down Tessera was made after careful analysis of possible market scenarios, the company’s structure, and financial situation.
The news of Tessera’s shutdown comes just under a year after it rebranded from its original name Fractional and announced a $20 million funding round led by crypto investment giant Paradigm, along with other notable investors. Tessera’s portfolio included several projects such as Nounlets, a fractional ownership platform for Nouns NFTs, and Escher, a curated digital fine art marketplace.
Escher, in particular, will also be shutting down. Chorlian stated that the targets needed to attain profitability for Escher compared to the time and resource costs to scale there just didn’t add up or make good business sense. It’s worth noting that the market for NFTs has been struggling through an extended crypto winter, and many marketplaces have embraced ways to allow users to invest in digital collectibles with smaller upfront costs.
Fractionalizing NFTs involves creating fungible tokens tied to an underlying digital asset, such as a Bored Ape or CryptoPunk. The NFT is often locked away in a vault, and fractional tokens can be traded on secondary marketplaces. Other fractionalizing platforms such as NFTX allow traders to pool NFTs of equal value into index funds and mint fungible ERC-20 tokens tied to underlying NFTs (ERC-721 tokens), creating increased liquidity.
It’s interesting to note that earlier this month, popular NFT marketplace Blur launched a peer-to-peer lending network called Blend, which allows traders to put up a percentage of the NFT’s price upfront and finance the remaining balance. This move by Blur may be an indication that marketplaces are looking for new ways to provide liquidity to the NFT market and attract users.
Lastly, it’s worth mentioning that Chorlian and four other individuals were charged by the U.S. Department of Justice last month for allegedly participating in a securities manipulation scheme. However, it’s unclear if these charges had any impact on Tessera’s decision to shut down.