What is it?

The reserve price of a vault is the price (in ETH) required to initiate an auction to completely acquire the NFT(s) it contains. The reserve price is set by the calculated weighted average of all ownership token owner votes.

If token owners who collectively own less than 50% of the total fraction supply are the only ones who have voted (or set a reserve price of 0), a reserve price will not be set and a buyout will not be possible. Additionally, token owners cannot set a reserve price greater or less than 5x the current weighted average.

The reserve price can only change by voting and is not impacted by the implied valuation of the vault based on the token supply in liquidity pools.

Examples:

• If you own 100% of the ownership tokens and set the reserve price to 100 ETH, the reserve price will be 100 ETH. However, if you own 75% of the tokens and someone who owns the other 25% votes on a reserve price of 50 ETH instead, the reserve price will instead be 87.5 ETH.
• If you only own 49% of the token supply and vote on a reserve price, but no one else who owns the remaining 51% of tokens has voted on a reserve price, there will be no reserve price set for the vault.

Can Anyone Vote on the Reserve Price?

Technically yes, anyone can vote but if they don’t have any tokens then their vote weight is 0 and they’ve wasted their own gas on a null vote.

What If I Own Fractions But Don’t Vote on the Reserve Price?

If enough people who collectively own 50% or more of the fraction supply do not vote, a buyout or auction will not be possible for that vault.

If you want a collector to have the chance to re-unify and completely claim the NFT you own a fraction of through a winning bid, you should vote on the reserve price.

How Do I Vote on the Reserve Price?

You can vote on the reserve price through the Fractional.art GUI or by directly interacting with the vault’s smart contract on the Ethereum blockchain.

To do this on fractional.art, navigate to the vault page of the respective fractional collection you’d like to vote a reserve price for (sample) and then follow these steps:

1. Select Settings & Actions > Update Reserve Price from the dropdown

2. Within the Set Reserve Price Window, update your vote and click Submit

3. Metamask will pop up with a transaction prompt. Send and sign the transaction from your wallet and your vote will be updated!

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Disclaimer: The Fractional Token Company, its officers, team, and community representatives are not registered investment advisors. All opinions shared on Twitter, Discord, or through other public channels are those of the respective individuals alone. Nothing discussed in this article should be relied upon for investment decisions nor is it investment advice. Fractions (fractional ownership tokens) are not intended to be investment contracts and The Fractional Token Company is not responsible for how curators choose to market their NFTs. Similarly, The Fractional Token Company does not create, handle, or manage the intermediary platforms, or networks through which fractions can be transferred, sold, or purchased. Publications from Fractional.art are solely for information and entertainment purposes only. Please consult and work directly with tax, legal, financial, and investment professionals before making any fractional creation, transferring, and purchasing decisions.