Thread by @CheeFinance

These days, NFT+DeFi is a big hit! While the market capitalization of #NFT is rapidly increasing, the trading volume is not as high as anticipated. This demonstrates the NFT's liquidity problem. Capital inefficiency and price discovery are at the root of this problem.

A thread👇

Many methods have emerged to address this issue. We categorize them here into 3 types of solutions: launching NFT-based tokens, fractionalizing NFT, and lending NFT. We will concentrate on the NFT Lending track due to the limited application scope of the first two methods!

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P2P Lending and Liquidity Pool are the two types of NFT Lending projects. @NFTfi is indispensable when it comes to NFT P2P lending. It is well-known for being the first to implement NFT+DeFi, despite its mechanism being.

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@arcade_xyz, another P2P lending platform, implements some NFTfi-based innovations. It enables the packing of a large number of NFTs and FTs as wNFT in order to initiate a loan request. You can use this method to obtain liquidity by pledging your wNFT.

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@pawnhouse_nft , on the other hand, is even more creative. With its auction and P2P lending features, Pawnhouse positions itself as an NFT pricing solution. PawnTicket NFT is generated to determine future equity ownership during the P2P lending process.

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The important part is that the ticket is automatically circulated in the market before it expires. As a result, the system can collect trading data and analyze the NFT's price corridor. If the borrower fails to repay the loan, the ticket enters a limited-time bidding period.

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The system learns the lower limit price of this NFT by collecting bidding data. Furthermore, NFT can be hammered directly. Pawnhouse offers a simultaneous multiple-round auction product, which allows the potential buyer to discover the higher price limit.

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Pawnhouse obtains a large amount of NFT pricing data from actual buyers in this manner, allowing it to generate a scientific price corridor for NFTs.
There are scenarios where P2P lending is not appropriate; this is where liquidity pool projects come in.

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There are scenarios where P2P lending is not appropriate; this is where liquidity pool projects come in.

@BendDAO provides such a solution. It's similar to an NFT version of a uni swap in that you can pledge NFTs to borrow tokens or give liquidity in exchange for rewards.

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However, you have a 48-hour grace period instead of being liquidated immediately. BendDAO also offers a Flash Claim, which is simply the NFT version of a flash loan.

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Bid-peer to peer pricing

@UpshotHQ uses a design mechanism called “Peer Prediction” to motivate people to answer questions honestly. Peer prediction uses a “mutual information” method to evaluate quality.
The more honest the answer, the more mutual information it receives.

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Time-weighted Average Price (TWAP)

TWAP is only applicable to NFT collections with an active market and large transaction volumes, prone to oracle attacks and potential manipulation.
Acquire on-chain TWAP on NFT floor prices through #Chainlink or #Sushiswap.

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