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NFTFi is an NFT lending market that offers the financial utility of NFTs and permits NFT enthusiasts to use their collection for rent, borrow, and fractionalize NFTs.
Utilizing collateral for borrowing loans is a traditional process, but nobody ever imagined using digital art as collateral. NFTFi is a top liquidity protocol for Non-fungible tokens (NFTs) allowing NFT fans to borrow digital assets from lenders using the NFT collection as collateral. The platform opened doors for earning returns, unlocking liquidity, and taking part in the emergent NFT finance ecosystem.
Let’s explore the NFT lending market in-depth.
What is NFTFi?
Launched in 2020 by Jonathan Gabler, and Stephen Young, NFTFi is a lending platform that uses NFTs to finance transactions by accessing more liquid assets. Here, digital collections are used as collateral to borrow digital assets from lenders.
Moreover, the collision between Decentralized Finance (DeFi) and NFTs enhanced possibilities for NFT holders to make their collection a much more liquid asset. NFT fractionalization, NFT renting, NFT derivatives, and lending/borrowing are some major services offered.
Services offered by the NFT lending market
It delivers a stage that helps NFT enthusiasts use their NFT collection to gain benefits. Here are a few of the services offered by the NFT lending market.
NFT fractionalization: This method splits an NFT’s ownership into multiple fungible tokens, each linked to the original NFT. The NFT is secured in a vault, and ERC-20 tokens are created to represent shares of the NFT. This approach benefits owners and buyers, allowing for innovative sales methods.
NFT renting: NFTs can be leased temporarily through a smart contract that acts as a holding mechanism, often requiring a security deposit. Once the rental term ends, the NFT reverts to the owner. This model offers a more conventional alternative to fractionalization.
NFT derivatives: A novel concept in the NFT finance sector, these derivatives are tradable agreements that speculate on the future value of NFT collections, akin to traditional financial derivatives.
Lending/borrowing: This financing form uses NFTs as collateral to secure loans of cryptocurrency or fiat money at a set interest rate, similar to how physical assets are used in conventional lending. Engaging in this type of financial obligation is relatively straightforward.
Why Pick NFTFi?
Transparency: The network operates on the Ethereum blockchain and is decentralized, non-custodial, and permissionless. Individuals can operate the platform using the digital wallet.
Top-notch security: Top-notch security is another key feature of the platform. All the smart contracts used over the platform are double-audited by ChianSecurity & Halborn.
0% Borrow fee: There is no need to pay any fee for borrowing as the platform doesn’t charge any borrowing fee. Also, it is a peer-to-peer protocol and includes fixed terms between the lender and the borrower.
No auto-liquidation: no auto-liquidation is another feature that makes it a standout performer. Every loan is offered in a peer-to-peer pattern under certain terms and conditions, reducing the risk of liquidation.
Top collections in the list
The lending platform holds a few of the most popular NFT projects like Wrapped CryptoPunks, Bored Ape Yacht Club (BAYC), and Mutant Ape Yacht Club (MAYC).
The Wrapped CryptoPunks project holds an average loan size of $55,345, a loan volume of $133.11 Million, and a loan count of 2405. BAYC, on the other hand, has an average loan size of 81,979, a loan volume of $82.80 Million, and a loan count of 1010.
MAYC has an average loan size of $21,035, a loan volume of $35.74 Million, and a loan count of 1698.
How to use the lending platform?
After knowing the features and benefits, users must be interested in knowing how the platform works, lending, or borrowing crypto. A few easy steps can help individuals rent, lend, borrow, and fractionalize NFTs.
Website: The very first step is to visit the website and click the dapp option available on the top right of the website.
Connecting wallet: The next thing to do is to connect the digital wallet with the platform which requires basic details like wallet address.
Listing NFTs: Once done, users can list the NFT collection they own. Remember, these NFTs will be then used for lending, renting, or borrowing the crypto loans.
Accepting the offer: The next thing to do is to wait for a suitable offer in case the user wants to take a loan. Accepting the offer will initiate the process. On accepting the offer, NFT goes into a secure escrow smart contract, and the user receives the wETH, DAI, or USDC in the digital wallet.
Repaying the loan: The last thing to do is to repay the loan amount within a specific period. Repaying the loan will automatically return the NFTs to the digital wallet.
Conclusion
Renting, borrowing, and fractionalizing NFTs becomes easy with the effective lending platform, NFTFi. The top liquidity protocol for NFT permits individuals to borrow digital assets from lenders using the NFT collection as collateral. High-level transparency, a 0% borrow fee, and top-notch security are a few of the major benefits offered by the lending platform. Additionally, Wrapped CryptoPunks, BAYC, and MAYC are top collections in the list.
FAQs
What is NFTFi?
NFTFi’s motive is to offer NFT owners financial flexibility by using NFTs to rent or borrow cryptocurrencies. The NFTs are used as collateral to borrow digital assets from lenders.
What are the advantages of the NFT lending market?
High-level transparency, security, 0% borrow fees, and no auto-liquidations are some major advantages of the lending platform.
What is NFT liquidity protocol?
NFT liquidity protocol is an innovation in the digital asset space and is designed to facilitate the purchasing and selling of NFTs on DeFi.
What are some top collections on the list?
Wrapped CryptoPunks, BAYC, and MAYC are a few of the top crypto projects streaming on the lending platform and are one of the most demanding projects over the platform.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
