What pops up on your mind when we mention the year 2020?
Covid-19 (or Corona Virus)!
Well, then what about the crypto world in 2020?
Bitcoin Halving (or Bitcoin Halvening)!
Well. Then what about Ethereum in 2020?
DeFi and NFT!
Ethereum network has become a mature open network for finance with all the products and services provided by the ecosystem. You could pretty much do everything - stake or lend your token for interests, borrow ETH or stablecoins such as Dai by putting other assets as collateral, swap your token instantly to perform secure trading, etc.
NFT has generated great tractions too! While NFT is getting recognized as important and valuable assets, not just in-game items but also digital arts, is it even possible if we could stake our favorite NFT for some ETH?
What is NFTfi? You could tell from its name, it is a DeFi product for NFT. NFTfi is a simple marketplace for NFT collateralized loans. You could put your NFTs up as collateral for a loan, or offer loans to other users.
Login to your wallet with Metamask (use Google Chrome or Opera Browser with Crypto Wallet), then go to “Borrow”. You will see the NFT assets in your wallet which you could use as collateral.
(Yes I’m a big-time Sandbox Landlord)
(Currently, it only supports certain types of assets. So I can’t stake my CryptoDozer doll yet )
Then we try and see how much I could borrow with my Sandbox Land. Just click the piece of asset and grant permission to the NFTfi smart contract. Your NFT will be listed on the loan marketplace and you will be able to receive offers from other lenders once the transaction is completed. (You will need to pay some gas fee here)
Now my Sandbox Land is successfully listed as collateral on the NFTfi marketplace.
Now we could wait until other users make a loan offer to my land. I could get some WETH (Wrapped ETH, an ERC-20 version of Ether) immediately in my wallet once I accept the offer. My NFT will be in escrow once this process is finished. This whole process is secured and powered by NFTfi’s smart contract.
This is a bit more complicated than making a loan on Compound but there are chances that you could get a higher return. You could choose the NFT you like on the marketplace and make a loan to it. Look, this is important because you will get the NFT if the loan is not paid back in time by the borrower.
Choose an NFT and you could customize your loan offer - Set loan amount (how much you are willing to lend out), the payback amount (how much you want to get back), and the loan duration (7, 30 or 90 days). The system will calculate the interest rate for you as a reference.
(We have made an offer of lending 0.06 WETH to get 0.08 WETH in return in 90 days, which gives us a 135% APR)
Please note that it will require WETH in the lender’s wallet to make the offer. If the borrower accepts the loan offer then the WETH in your wallet will be deducted and the borrower’s NFT will be locked in escrow - the loan is paid out.
Lending on your NFT assets might sound like a very niche market for you. But it is a very important player in the general market when art and collectible markets have less liquidity than any other type of asset, especially when the owner of valuable art and collectible needs short term cash. Due to the low liquidity of art and collectible, there are chances of getting higher returns from the regular loan.
We see NFTfi as an innovation as well as a key player along with the adoption and blooming of the NFT market.