With the development of decentralized applications and blockchain technology, NFT is becoming more and more popular with people. Many projects were born to optimize all aspects of NFT. NFT Lending was born to partly solve that problem. So what is the problem here, let’s find out below:

What is NFTs Lending?

NFT Lending is a lending protocol where the owner puts his NFT as collateral to borrow another amount. This is a good option for borrowers who want to keep their NFT but need money quickly.

Why do you need an NFT mortgage?

The NFT market is still very illiquid due to the uniqueness of the NFT, which makes it difficult for you to want to sell your NFT quickly for some reason. But you still believe that NFT value can increase sharply in the future so you don’t want to sell them cheap compared to market price…

So now you will find the NFT lending platform, you just need to provide your NFT as collateral to the lender, they will give you the money you need.

How Does NFT Lending Work?

On an NFT lending platform, you request a loan and wait for an interested lender to make your offer. Or if you’re the one looking to lend, you can browse the NFT as collateral and make an offer for any funds you’re interested in. Once each party agrees to the terms, the smart contract handles all the rest of the transaction.

If the borrower defaults on the loan and interest is paid at the end of the set period, the NFT is transferred to the lender. If the borrower repays the loan plus the interest rate restriction, their NFT will then be returned to themọ.

The price of an NFT can often fluctuate significantly, so lenders can offer a very low loan-to-value (LTV) ratio.

What are the risks with NFT Lending?

There are risks on both sides that when making a transaction you need to understand:

For the lender: You could lose the entire loan property along with a reduction in the price of the NFT that the borrower mortgaged.

For borrowers: Do you lose your NFT mortgage because you can’t pay back your loan plus interest, while the price of the NFT skyrockets

Some NFT lending platforms

Currently, there are many different NFT lending platforms:

Arcade

Arcade is an NFTs Lending platform, allowing users to lend & borrow to create liquidity for NFTs.

Arcade highlights are:

– Arcade is designed as an end-user-focused application, with a simple interface that is easy to use for all participants.

-Arcade facilitates trustless off-chain order matching by using structured digital signatures to confirm loan terms from borrowers and lenders, but Loans will be settled on-chain to receive security from Ethereum – The leading security Blockchain in Crypto.

Stater

Stater is a peer-to-peer lending DeFi platform for NFT tokens on the Ethereum platform. Allows users to unlock and leverage their NFT assets without losing ownership

Stater has three main activities: borrowing, lending, checking liquidity on Loanbooks, and liquidating assets for outstanding loans.

The outstanding feature of the Stater lending platform allows users to have 2 ways to trade: Marketplace or Lending Pool. In either option, Stater will act as an unattended escrow institution between lenders and borrowers.

Nexo

Nexo is an NFT lending platform that offers NFT-backed loans for digital assets. This is the service they provide to both institutional and retail lenders for blue chip NFTs like Bored Ape Yacht Club NFTs and Cryptopunks.

NFTfi

NFTfi is a marketplace for NFT-collateralized DeFi loans. Through this NFTfi protocol users can lend or borrow NFT. NFTfi allows users to deposit/send their NFT as collateral to borrow a corresponding amount of ETH

TribeOne

TribeOne is a DeFi project with a variety of products, including: lending platform, savings platform, insurance platform, financial platform for NFT assets.

TribeOne’s vision is to build products that contribute to the DeFi ecosystem to attract more people from the traditional financial space to maximize profits

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