NFTs are finding a new life, but in a different market.
Protocol-to-peer:allows a borrower to post NFTs as collateral in exchange for its synthetic stablecoin. If they default, the underlying NFT is auctioned.
Peer-to-peer: NFTfi and Arcade allow borrowers to propose terms for a loan against their valuable NFTs. If someone accepts their offer , they lend the borrower what they asked for. If the borrower defaults, the lender can take the NFT. Pool-to-peer: BendDao and Drops pools loans and an algorithm sets terms. If the borrower defaults, NFTs are posted for auction. : "Pricing protocols are getting better at pricing assets, but we’re not there yet. There’s not enough liquidity to base a lending decision on a specific trade," Gabe Frank, chief of NFT lending protocol Arcade, tells Axios.
"It's super niche right now with just 5,000 active users, but with gaming and NFTs representing claims to real-life items, it could be mainstream in the next two to three years," he added . "Unlike in fungible markets, one of the most difficult things to establish for NFTs are their real time valuations," according to Cherry Ventures, an early-stage VC shop.
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