NFT Lending: What You Need to Know

NFT Lending: What You Need to Know - Collings NFT

NFT Lending solves low liquidity and motivates the public to enter the NFT market. Here are the 4 types you should know about: peer-to-peer NFT lending, peer-to-protocol NFT lending, collaterised debt position (CDP), and NFT rentals


Peer-to-peer NFT Lending

Peer-to-peer NFT Lending matches lenders with borrowers. When an owner lists an NFT as collateral on a platform, owners receive loan offers.

NFTs are returned to a user's wallet once the loan is repaid before it expires. If defaulted, the lender gets the NFT at a huge discount.


Peer-to-Protocol NFT Lending 

Peer-to-protocol NFT Lending allows users to borrow from the protocol directly. Liquidity providers are relied upon to add crypto to a protocol pool. 

Borrowers are allowed access to liquidity once they collateralize their NFTs and lock them in the protocol’s digital vaults.


Collateralised Debt Position (CDP)

DeFi platform MakerDAO, is known for Collateralised Debt Position (CDP). This allows borrowers to take out the stablecoin DAI when ETH is collateralized.

JPEG’d is another platform. It lets users collateralize whitelisted blue-chip NFTs and borrow the synthetic stablecoin, $PUSd. Borrowers can use $PUSd to generate liquidity. They can either swap it for other crypto or earn from its interest. 


NFT Rentals

Platforms like reNFT, a permissionless market for renters and tenants performs peer-to-peer NFT rentals. Assets are transferred from wallet to wallet for a "tenancy" period. 

Tenants receive full access to token-gated incentives such as Discord servers, whitelist giveaways etc.


Apart from being bought, sold, and held, NFTs can also be used for other financial arrangements. 

NFT Lending solves the issue of low liquidity and encourages individuals to join the NFT market.

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