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NFTfi is a peer-to-peer NFT mortgage loan market that allows asset holders to use their NFT as collateral to borrow assets (currently supports wETH and DAI) and lend to others.
Written by: Karen
The popularity of NBA Top Shot and Hashmasks made NFT quickly out of the lap again. According to data from Cryptoslam, the sales of the two exceeded 300 million U.S. dollars in just two months, and the holders of the top 40 digital collectible items currently ranked by The “niche” move towards the “public.”
Statistics on sales of encrypted collectibles, source: Cryptoslam
When NFT is on the verge of an outbreak, in addition to being used for collection and trading (which is difficult to match), it is worth exploring whether the NFT assets held by collectors can exert greater value. Today, we focus our attention on a mortgage market, NFTfi, that can empower NFT assets and increase liquidity.
What is NFTfi?
NFTfi was launched in the middle of last year and is a peer-to-peer NFT mortgage loan market that allows NFT asset holders to use their NFT as collateral to borrow assets (currently supports wETH and DAI) and lend to others. NFTfi stated that the reason for the launch of NFTfi is that compared with legal assets, equity and other types of assets, the market for art and collectibles is very liquid, especially for NFT assets. NFTfi products will provide a large amount of liquidity and lending functions for NFT assets to meet the diversified funding needs of users.
According to LinkedIn data show , NFTfi founder and CEO Stephen Young is a block chain business intelligence contract developers and designers, was previously employed at end encryption trading platform Coindirect chief product officer.
At the end of last month, NFTfi announced the completion of USD 890,000 in financing. Individual investors include CryptoKitties and Roham Gharegozlou, CEO of NBA Top Shot development team Dapper Labs. Other investors include Coinfund, 1KX, Collab+Currency, Maven 11, The LAO and strategic investor Animoca Brands.
In addition, some builders and collectors in the NFT and DeFi fields also participated in this financing, including Sebastien Borget (COO of The Sandbox), Johnathan Gabler (Founding Partner of Outlier Ventures), Andrew Steinwald (Founding of Zima Red) People), Snowfro (founder of Artbocks) and Roberto Ceresia (founder of ark.gallery and Wrapped Punks), etc.
How does NFTfi work?
Specifically, borrowers can pledge any ERC-721 tokens (NFT assets), and other users can provide loans on demand. If the borrower accepts this loan, he will receive wETH and DAI from the lender. At the same time, the NFT assets are locked into the NFTfi smart contract until the borrower pays off the loan. If the borrower does not pay off the loan before the due date, the NFT assets will be transferred to the lender.
For lenders, they can provide loans for any NFT assets they like, and set the loan amount, loan period, and the total amount that the borrower hopes to return after maturity. The loan terms range from 7, 14, 30 and 90 days.
In the worst case, the lender will get the NFT because the borrower defaults and fails to pay off the loan.
NFTfi does not charge any fees to the borrower, the borrower only pays the lender the fee (interest), and the fee charged by NFTfi is only 5% of the interest received by the lender after the successful completion of the transaction. NFTfi also stated previously that as transaction volume and the number of users increase, fees will be further reduced in the future.
NFTfi’s future plan
NFTfi plans to upgrade the UI interface and add support for the Flow blockchain in the next few months, as well as issuing governance tokens.
In addition, NFTfi will also launch a liquidity fund pool, allowing users to put their NFT assets into the fund pool established by NFT veterans for value discovery and earn interest. This will help those who cannot accurately assess the market value of their NFT assets. Users maximize their profits.
What should I pay attention to when using NFTfi?
Of course, for both borrowers and lenders, using the NFTfi platform to borrow money also has certain risks.
From the perspective of the lender, when the borrower defaults, he can only receive the mortgaged NFT assets. This requires the lender to set a loan amount lower than the value of the NFT asset in advance, and the asset value of the NFT requires the lender Evaluate carefully.
Another noteworthy issue is that the value of NFT assets may decline or appreciate over time. If it is the first case, the lender may suffer losses.
For borrowers, they need to pay attention to the annual interest rate, and it may take longer to find a lower annual interest rate when the demand is not urgent. In order to avoid predatory pricing (to drive out rival pricing), NFTfi sets the upper limit of the repayment amount to 50% higher than the loan amount.
In summary, NFTfi’s ability to meet user lending needs and provide liquidity and core functions for NFT assets is expected to enable digital collectibles and at the same time promote NFT to enter a turning point in its development.
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