Briefly analyze the three modes of NFT mortgage lending: peer-to-peer, fund pool and centralized mode

(In a trance, the summer of DeFi in 2020 has passed for more than ten months. As a DeFi lending "white horse stock", Aave's market value ranking has quietly dropped to 61, and Compound has fallen outside the 100. I can't help but feel a little unexpected. .)

Speaking of mortgage lending, for NFT, the mortgage obviously needs to bear a certain liquidity cost: in the face of Token rise, it cannot be sold and profited; in the face of Token fall, it can only be held passively.

For institutions or core players who hold long-term head NFT projects (such as CryptoPunks and BAYC, etc.), they may not have the intention to sell, so when assets need to be realized, mortgage lending is an option worth considering. The price of head NFTs is also relatively stable.

Further, for speculative purposes, there may be frequent buying and selling of NFTs in the hands of retail investors, and the overall value of NFTs is not high, which is relatively unsuitable for mortgage.

Therefore, it is believed that NFT lending will be a niche market in the short term, mainly for head/blue-chip NFT holders.

Three types of projects
peer-to-peer mode

model

In DeFi lending, Aave's predecessor, Ethlend, uses a peer-to-peer model.

Similar to Arcade, its AssetWrapper contract supports packaging and mortgage of ERC721, ERC1155, and ERC20 assets, and then generates wNFT. After the borrower sets the loan amount, repayment amount, currency and time, it will mortgage the wNFT, and then wait for the lender to match the order. Arcade will add an instalment model in a future release.

It should be noted that Arcade does not set up automatic liquidation, and in the event of a default, the borrower can still repay the loan until the lender claims the collateral.

For a peer-to-peer platform, whether the loan demand can be responded to in a timely manner is directly related to the user experience of the platform. Average wait times for matches are not yet available in Arcade's platform data. According to team members, BAYC and CryptoPunks floor price loan requests can basically be responded to instantly.

In addition, the difference between NFT and FT is that NFTs in the same series are different. It is difficult for lenders to evaluate NFTs with high rarity, or the two parties disagree on the valuation of collateral, which increases the uncertainty of lending. sex.

Arcade’s total platform loan volume now stands at $9.5 million, supporting 49 NFT Collections. In late December, Arcade raised a $15 million Series A round led by Pantera Capital.