NFT lending is one of the easy ways to make money from NFT.
Table of contents
- The problem of NFT
- 4 NFT lending projects in the market
1. NFT's problem
NFT is an asset class in crypto, with a value of billions of US dollars traded every month. The problem with NFTs is that they don't have as much liquidity as Bitcoins that can be sold immediately, not months or even years until someone buys your NFT. When you sell your NFT, you have to sell the whole thing.
Therefore, the most reasonable solution to help you solve this problem is an NFT loan.
2. 4 NFT lending projects on the market
The 4 famous NFT lending projects in the market are respectively:
NFTfi
This NFT project recreates the classic model of the lending market: Matching lenders with borrowers. NFTfi is a popular peer-to-peer NFT lending platform. When you list your NFT as collateral on the platform, you will receive loan offers from others.
If you like any of the offers, you can accept an offer and instantly get WETH or DAI (Stablecoin) from the wallet of the lending user. As part of the loan agreement, the platform automatically transfers your NFT into a crypto vault. You will get the NFT back to your wallet when you repay the loan before the due date.
If you default on your loan, the lender will receive your NFT at a huge discount. Dramatic changes in the NFT collection floor price do not affect loan terms. It's a peer-to-peer agreement on its terms.
NFTfi charges lenders 5% on interest earned on successful loans (no fees in case of default). Borrowers use the platform for free.
BendDAO
The peer-to-peer NFT lending platform allows you to borrow directly from the protocol.
These NFT lending platforms rely on liquidity providers adding cryptocurrencies to the protocol pool. Borrowers can access liquidity immediately after staking NFTs and locking them in a digital vault powered by the protocol's smart contract.
BendDAO is a popular peer-to-peer platform. The protocol has around 1,000 NFTs collateralized since that could include Bored Ape Yacht Club's 273 NFTs. This platform uses Chainlink oracles as a bridge connecting blockchains with data streams to get floor price information for OpenSea.
BendDAO liquidates the collateralized NFT when the floor price in the collection falls below a certain level, taking into account the market value of the NFT collateral and the amount borrowed. There is a 48 hour waiting period before any liquidation occurs, giving NFT holders a chance to rescue their beloved NFT.
JPEG
JPEG will provide irreplaceable debt positions. The platform has a total locked value (TVL) of 4,400 ETH in smart contracts as of May 2022.
Users mortgage white-chip blue-chip NFTs like CryptoPunks and borrow a synthetic stablecoin, like PUSd, pegged to the US dollar on a 1:1 basis.
As a borrower, you can use PUSd to provide liquidity on the protocol and earn interest. Or you can swap it for other cryptocurrencies to look for opportunities elsewhere. And when you repay the loan, you can regain control of your NFT.
JPEG will use Chainlink oracles to track the market price of NFT collateral.
reNFT
reNFT is a popular platform. It's an unsanctioned market for potential hires and rentals with varying lease terms and conditions.
Instead of locking NFT collateral in a crypto vault, the protocol facilitates peer-to-peer NFT leasing, where assets move from one wallet to another for a “rent” period.
As a tenant of a rented NFT, you will receive full access to tokenized perks such as Discord servers or whitelist giveaways offered to holders of certain NFTs.
