NFT20 is a permissionless NFT fractionalization protocol launched in 2020, deployed on Ethereum and Polygon. Mechanically, holders deposit NFTs of a collection into its pool and receive ERC-20 fragment tokens at a 1:1 rate, which can be traded immediately on DEXs like Uniswap and SushiSwap, creating instant liquidity for NFTs that lack an order book. Depositors can also reverse the process, exchanging fragments for any NFT in the pool without item-by-item matching.
Protocol governance is executed by MuseDAO through the MUSE token, with holders deciding pool listings and parameters, and liquidity providers receiving mining incentives. On the pain-point side, NFT pricing relies on item-by-item listing and negotiation, making price discovery inefficient within a collection; NFT20 prices the collection as a whole through pooling plus fragment tokens. The protocol was one of the earliest implementations of NFT fractionalization, later displaced by peers like NFTX with deeper pools, and per DefiLlama its current TVL stands at roughly 100,000 dollars.
MUSE