How Do I Get An NFT Loan Using NFT Collateral?

ByMuhammad Shakeel

NFTs are digital media assets that can be used to create unique content. They are most commonly stored on Ethereum. Because NFTs are unique digital media, rather than fungible money, they are fundamentally ineligible. However, this doesn’t mean that you can’t get nft liquidity from your NFTs. This Bankless tactic will show you how to use NFTfi to borrow against your digital collectibles.

  • Objective: Get nft loan collateral for NFTfi
  • Skill Intermediate
  • Effort Learn how NFT lending works
  • ROI: This is a variable number, but it can be substantial if borrowed funds have been used well.

What is NFTfi?

It is possible to argue that the NFT ecosystem has moved beyond its teenage years. Many have realized that NFTs can be used for many purposes and that they are a “blank canvas” technology. Now, the race is on to improve the infrastructure surrounding NFTs. Why? Because NFTs can be programmed assets, they can be used in new ways. Crypto natives want to take advantage of these unique opportunities. NFT infrastructure is still being developed, but there are some promising early candidates in NFT index projects such as NFTX, NFT20, and NFT fractionalization project like NIFTEX. These platforms allow you to sell your NFT collateral for liquidity. What if you want to keep ownership and borrow against it? This will allow you to access liquidity immediately. NFTfi is a promising young project that makes this type of NFT lending possible. It was launched last year and allows users to easily put up NFTs against loans in a permissionless manner. NFTfi’s basic concept is that it’s a peer to peer (P2P), marketplace where NFT loans are made on the protocol by users and for them. As collateral, you provide an NFT ( specifically an EC-721). Then, if/when someone offers you a loan, you can either accept or decline it. If you accept, you will receive the agreed-upon loan amount in Wrapped Ethereum (WETH), or DAI. At that point, your NFT collateral will become locked in NFTfi’s smart contract infrastructure. You can retrieve your NFT by simply paying back the loan plus interest within the timeframe. In the event of default, the lender will instead pay the NFT.

 

Remember: this market is subjective NFTs can be extremely subjective. Beauty is all in the eyes of the beholder, as the old saying goes. While you might be passionate about one project, your friend may feel the exact opposite. It all comes down to personal taste. NFTfi is a P2P marketplace, so this dynamic is very important. NFTfi is not a P2P marketplace. You aren’t guaranteed to get a loan of a certain size or within a given time. It all depends on what other NFTfi users feel comfortable offering while scrolling through the listed collateral. You might also put up an NFT to secure NFTfi. It could be left there with no interest for a long period of time. In contrast, you may receive multiple loan offers if you list a highly sought-after NFT within hours. It all comes down to the NFTs that you are using.

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