Thread by @itsmechase

The Collision of NFTs and DeFi 🧵

#Permissionless2022

1/ How do you borrow against an NFT?

“As long as there is a market with a price, the lending protocol can give a loan against it, when the value drops, you go through a liquidation process”

Important Pieces: Efficiency of assets, pricing accuracy

@yubo_ruan

2/ We are working on a loan base market for NFTs…starting with Bored Apes…but floor price is too volatile…for liquidation, you don’t want to liquidate someone for [manipulative] floor drops…we accommodating for “instant dump” situations

@yubo_ruan

3/ Who sets the pricing for fractionalization?

When you fractionalize an NFT, you get a bunch of smaller NFTs back…the market sets the price…they don’t exactly trade at the market price

@andy8052

4/ “The original smart contracts for @fractional didn’t include airdrops…as we evolve, we’re working on how we allow for fractional NFT owners to determine what they do with that airdrop. For now, if someone buys out the entire vault, they can claim the airdrop”

@andy8052

5/ How do you do custody for fractionalized NFTs

It’s fully non-custodial. When you go to Fractionalized…no one owns it, Fractional never touches it…it’s like when you open up a loan on MakerDAO

@andy8052

6/ Is there a process for verifying ownership of a fractionalized NFT?

[Fractional] smart contracts are not ‘opinionated’. The underlying protocol is permissionless.

@andy8052

7/ How will L2s and ZKs be used in NFTs and DeFi

“We want to reduce gas fees for users and [speed up] txns for our users…we are focused on ZK EVM to expand our L2 ecosystem. For gamefi projects, security is not priority, but [speed and cost] is…”

@Isaac_ZKSpace

8/ How do you think about Gaming & DeFi?

Huge room for growth of NFTs in gaming…a lot of the existing NFT projects plan on turning in to games…staking now is important for future users “getting ahead” in the game

@halsteady

9/ Renting an NFT can eventually be like renting a house, but with permissionless smart contracts

@andy8052

If my Pokémon cards were NFTs, I could actually do something with them as opposed to them just sitting in my basement

@halsteady

10/ Who can flex a fractionalized NFT?

“It’s a social thing..is it ok if you make your profile picture an NFT that you own one percent of…it’s up to you…it’s a social community thing as opposed to flexing a rare pfp - basically signaling ‘I’m part of a community’”

@andy8052

11/ “Say you own a soccer team…if I own 5 percent of Madrid, I would show everyone I was an owner…I think you can relate that to fractionalized NFTs”

@halsteady

12/ On ERC-1155 token…

“I’m an 1155 maxi 😂

The semi-fungible NFT is really interesting and enable some really interesting stuff

They offer more of a middle ground between 20s and 721s…”

@andy8052

13/ It does not feel the same to own a fraction of an NFT vs. the entire thing. Your ownership is inherently different. There is a long way to go to narrow the gap, but it will be hard to close the gap completely

@andy8052

14/ Bitcoin psychology is similar to fractionalized NFTs. Many people will just buy a fraction of a Bitcoin. Or, they will just buy another coin. The same applies to NFTs, some may buy a fraction of an NFT, but others will buy another NFT

@yubo_ruan

15/ When people ask if they own Bitcoin, they say yes, even if they own a fraction of a Bitcoin

The same could be true for NFTs…

@halsteady

16/ Future of NFTs and DeFi…

Dynamic NFTs. The value of the NFT changes based on how external data changes @halsteady

NFTs as collateral to borrow @yubo_ruan

17/ Future of NFTs and DeFi…

More interesting mechanisms for buy-side liquidity. We need a “sell it now” button via liquidity pools @andy8052

The ability to permissionlessly lend utility NFTs (e.g. lending your Permie to someone who is attending Permissionless)

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