It's no secret that NFT lending has gained some traction in recent times. Why? Well, lenders can earn without selling their assets, and borrowers can earn without owning it.
. When NFT owners temporarily swap their tokens for other crypto or fiat, they spread their investments across a variety of assets. NFT lending could serve as a supplement to a sound risk management strategy as long as loan deadlines are adequately managed.NFT lending provides a way for people to invest in NFTs without buying them outright, thus limiting their financial risks to the period of the loan.
Unlike P2P NFT lending, what’s being monitored here is not a deadline but the health factor of the NFT loan – essentially, the difference in collateralized market value and outstanding loan amount. As soon as the health factor falls below a threshold, the asset is typically transferred to the protocol. Depending on the platform, the NFT owner may be afforded a grace period to repay their loan to claim the NFT back.
In addition, the NFDP can be traded on a secondary market; ownership of the digital asset can switch hands easily, providing a more flexible way for users to exit an investment or leverage their current NFDP asset.NFT rentals are slightly different from the conventional lending models as the main aim for renters isn’t interest but the perks associated with the NFT, be it community or club
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