1) #NFTFi - A New Catalyst For NFTs?
NFTs have been in existence since 2018, initially utilized for a niche purpose within a niche group. One of the biggest questions surrounding NFTs is whether they should be considered an investment or a digital collectible...🧵
NFTs have been in existence since 2018, initially utilized for a niche purpose within a niche group. One of the biggest questions surrounding NFTs is whether they should be considered an investment or a digital collectible...🧵
2) As slowly but steady an actively and innovative submarket called NFTFi is growing, this question becomes more and more irrelevant. With this article we want to guide you through the combination of #NFTs and #DeFi and present you interesting projects we're excited about.
3) What's NFTFi?
The NFT market, tend to have lower liquidity than other types of assets such as crypto coins or stocks.
Why? It is still relatively new and much of the activity in this market is based on speculation.
NFTFi was created with the goal of addressing this issue.
The NFT market, tend to have lower liquidity than other types of assets such as crypto coins or stocks.
Why? It is still relatively new and much of the activity in this market is based on speculation.
NFTFi was created with the goal of addressing this issue.
4) The legend @0xminion did a great job mapping out the NFTFi ecosystem. So let's go down the rabbit hole of these different categories.
https://twitter.com/0xminion/status/1562495502377431040?s=20&t=rZZLdJbM8PkQoD426LlGzg
5)💰Lending/Borrowing
So you just spent your life savings on a nice PFP and instead of just flexing with it on Twitter you also want to access the value of it by taking out a loan using it as collateral. Take a look at the picture to see how it works when using @NFTfi.
So you just spent your life savings on a nice PFP and instead of just flexing with it on Twitter you also want to access the value of it by taking out a loan using it as collateral. Take a look at the picture to see how it works when using @NFTfi.
6) Lending NFTs poses a high risk from a protocol perspective, as the NFT market is known for its volatility and potential for rugpulls. To mitigate this risk, many lending protocols only accept blue-chip NFTs.
7) Peer-to-peer model for NFT lending is capital-inefficient, as it relies on matching borrowers and lenders with a double coincidence of wants. @BendDAO and @JPEGd_69_d have introduced a more efficient "peer-to-pool" model, which connects demand and supply in a customizable LP.
8)🔁Renting
Imagine you own an NFT that possesses utility, particularly in the context of a game. Now you have the option to utilize the utility yourself or to lease the NFT to another person for a cost
Imagine you own an NFT that possesses utility, particularly in the context of a game. Now you have the option to utilize the utility yourself or to lease the NFT to another person for a cost
9) On @VeraNFTs and @renftlabs you can rent your NFT. This smart contract includes details like the cost of the rent and a collateral, which is worth more than the NFT to protect the lender. Once the rental period is over the NFT and collateral go back to their original owners.
10) There are two different options of renting:
Over-collateralized renting: A collateral, that is worth more than the NFT you want to borrow is put up.
Under-collateralized renting, you pay a rental fee and receive a wNFT with the same utility. Copy NFT is burned after rental.
Over-collateralized renting: A collateral, that is worth more than the NFT you want to borrow is put up.
Under-collateralized renting, you pay a rental fee and receive a wNFT with the same utility. Copy NFT is burned after rental.
11)📈Derivates
If you are into crypto, you probably know derivates.
Now you can also buy or sell NFTs based on their future value. This allows for more advanced trading strategies that can help users increase their profits while managing risk and exposure.
If you are into crypto, you probably know derivates.
Now you can also buy or sell NFTs based on their future value. This allows for more advanced trading strategies that can help users increase their profits while managing risk and exposure.
12) One interesting project is @nftperp, a perpetual futures DEX for NFTs. You can either try the "Paper Trading" version, to test you degen skills, when it comes to predicting the floor price of BAYC or join their private beta, where you can trade with real assets.
13)💵BNPL
Everybody has done it before. You are online shopping and choose the option to buy it now and pay it later. This is a popular trend among tech-savvy young people in recent years. Web3 developers are now applying this budget-friendly financing method to NFT markets.
Everybody has done it before. You are online shopping and choose the option to buy it now and pay it later. This is a popular trend among tech-savvy young people in recent years. Web3 developers are now applying this budget-friendly financing method to NFT markets.
14) @usecyan is a platform for BNPL.
- Initiate a BNPL plan on Cyan for an NFT collection that is currently listed on @opensea, @LooksRare, @sudoswap, etc.
- Cyan offers an installment plan with interest rates, which you need to pay over a 3-month period.
- Initiate a BNPL plan on Cyan for an NFT collection that is currently listed on @opensea, @LooksRare, @sudoswap, etc.
- Cyan offers an installment plan with interest rates, which you need to pay over a 3-month period.
15)
- Regardless of any changes in NFT prices, the installment payments stay the same over the three-month period.
- If you agree to the plan, ETH from Cyan's vaults are used to purchase the NFT and it is held in escrow under a Cyan-wrapped smart contract.
- Regardless of any changes in NFT prices, the installment payments stay the same over the three-month period.
- If you agree to the plan, ETH from Cyan's vaults are used to purchase the NFT and it is held in escrow under a Cyan-wrapped smart contract.
16)
- Once you finished paying all your installments, the NFT is transferred into your wallet and you have full ownership.
- If you miss a payment, it's considered a default, and the NFT will remain in the appropriate Cyan vault to be sold.
- Once you finished paying all your installments, the NFT is transferred into your wallet and you have full ownership.
- If you miss a payment, it's considered a default, and the NFT will remain in the appropriate Cyan vault to be sold.
17)🖼️Fractionalization
Making a non-fungible asset kind of fungible is what fractionalization is attempting to do. Fractionalization involves breaking down an NFT into smaller units that can be bought and traded on either a public or private marketplace.
Making a non-fungible asset kind of fungible is what fractionalization is attempting to do. Fractionalization involves breaking down an NFT into smaller units that can be bought and traded on either a public or private marketplace.
18) @tessera is one of the leading platforms for fractionalization and makes it possible for average investors to gain access to valuable NFTs that would otherwise be out of their price range.
19)📝Appraisals
Determining the value of NFTs is a challenging task due to their illiquid and low-velocity nature. An alternative approach is to remove centralized valuation processes and rely on market speculators. One example of an NFT appraisal project is @abacus_wtf.
Determining the value of NFTs is a challenging task due to their illiquid and low-velocity nature. An alternative approach is to remove centralized valuation processes and rely on market speculators. One example of an NFT appraisal project is @abacus_wtf.
20) To find out the pros and cons of every NFTFi solution we presented and to read our conclusion, check out our Medium article: bit.ly/nftfinance
• • •
Missing some Tweet in this thread? You can try to
force a refresh
