NFTFi (NFT + DeFi) is a set of liquidity protocols that allow NFT to fund transactions by accessing more liquid assets completely trustless manner with the help of cryptographic tokens and smart contracts.
The NFT-Fi ecosystem will also allow NFT collectors to optimize their cash flow. It will provide an additional incentive to buy and hold NFT as an asset class with long-term potential rather than a vehicle for institutions’ investment base.
The protocols in the NFT-Fi array were created primarily to increase liquidity for NFTs, an asset class previously considered illiquid due to market volatility and their uniqueness – a barrier to entry with price discovery.
Projects within NFT-Fi will also assist in optimizing cash flow for NFT collectors, creating more incentive for them to buy and hoard NFT as an asset class of long-term value rather than a speculative vehicle such as NFTs Present.
Essentially, NFT-Fi projects convert NFTs into a token exchangeable with the ERC-20 standard, similar to the profitable tokens of DeFi projects like AAVE’s aTokens or SushiSwap’s xTokens.
Like DeFi lending, NFT lending is the act of collateralizing your NFT in exchange for instant access to a crypto loan, often backed online via smart contracts. The smart contract contains the asset, liquidity (loan), and terms and conditions of the loan. NFT Lending will provide additional liquidity support for the entire NFT ecosystem.
Lender
This new industry allows NFT lenders to leverage their revenues to earn interest, paid by borrowers, in the form of loan interest.
Liquidity providers use their idle capital to earn attractive yields.
If the Borrower defaults on the loan, they have the opportunity to receive the NFT at a high discount from the market price. Strategies vary between liquidity providers.
Borrower
Borrowers can also finance new NFT purchases through loans, as they can access more liquid capital without having to sell their NFTs. Due to the volatility of the crypto markets and NFTs, this must be considered a high-risk endeavor.
NFT holders can deposit or deposit their NFT as collateral to borrow a corresponding amount of $ETH.
Imagine owning an NFT with a utility (especially a game NFT). You can use that facility yourself, or you can rent out the NFT to someone else for a fee.
Renting an NFT gives you the benefits of having an NFT without the financial commitment of investing in it.
With this form, owners can earn passive income from NFT on their own terms without worrying about division issues.
In addition, they can access the community’s NFT-controlled events for a period of time, if they themselves do not use them for that purpose but wish to continue to be exposed to the NFT.
Fractionalization is the act of dividing an NFT into smaller fractionated pieces for sale and trade in the public or private markets. This process makes it possible to share ownership of the NFT through a set of fungible tokens pegged to the original NFT.
The benefit of fractionalization of NFTs is that it gives access to valuable NFTs that are too expensive for the average investor. Ownership is divided and represented by shares more rationally using fungible tokens. This makes NFT ownership more accessible and can create a more liquid market for expensive NFTs.
The concept of derivative trading in crypto assets is similarly applied to NFTs. It will provide a platform for retail users and traders to hold long or short positions on the value of NFT, thereby enabling more robust trading strategies that can maximize their earning opportunities and profits for users while hedging risks and risks.
NFT Derivatives will open up many possibilities for NFT liquidity using leverage to trade NFTs.
The derivatives market in TradeFi is significantly larger than the spot market, showing the potential for growth of the NFT market with NFT derivatives.
Blur coin is the main coin of the Blur.io platform – a platform that combines NFT Aggregator (a solution for aggregating prices from NFT exchanges) and NFT Marketplace (NFT Aggregation Exchange) for the purpose of optimizing the experience. NFT trading, as well as providing necessary tools for professional NFT traders of the Ethereum ecosystem.
In just a short time after launch, Blur has attracted enthusiastic participation from the community with the number of daily users has continuously ranked 2nd, equal to about 1/4 of OpenSea.
X2Y2 is an NFT Marketplace platform with a user-friendly interface backed by many prominent names in DeFi and NFT such as: Uniswap, NFTGO, OpenSea, Nansen, etc.
The X2Y2 development team has always been active in researching the NFT market, which is reflected in the wide variety of NFT collections available on its marketplace.
With volume reaching over $110M in 7D, ranked #3 on DappRadar behind OpenSea and Blur. This shows that the business model of X2Y2 is extremely effective and brings great profits to the project.
BenDAO is an “NFT Lending” platform that was born at the end of the Bull-Run 2021 season, and is a name that is widely mentioned by the community due to having just had a “over 600% price increase”. Data from DefilLama, the platform is raising a total of over $238.8M TVL on the network and has added over $100M since T12/2022 when $BTC was trading at $16K.
LooksRare is the project that built an NFT Marketplace platform with a variety of collections and products that provide users with a completely new and unique shopping experience. Since its launch, it has achieved many remarkable achievements.
LooksRare has “worked with many renowned partners and artists” in the arts and entertainment sectors to develop unique and rich NFT content such as Netflix, Coca-Cola, and Mercedes-Benz.
Overall, NFT-Fi is an essential tool to help NFT markets access broader funding. 2 areas of great public interest combined together make a good idea that allows owners to make real profits from their NFTs, not just speculative action. Simple. Given the great benefits NFT-Fi offers, it is very likely that in the near future it will play an essential role in providing the NFT with the elements necessary for space to be widely accepted as a type of asset produced.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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