An NFT investor and collector has used his batch of 104 NFTs from the CryptoPunks as collateral to receive an $8.3 million loan in the DAI stablecoin. The loan was requested by the pseudonymous investor “0x650d”, known for canceling, at the last minute, the auction of his CryptoPunks collection at Sotheby’s in February of this year. At the time, “0x650d” tweeted that he had decided to HODL his digital assets.
Now, the investor has used his collection of CryptoPunks to borrow on the NFTfi market, through liquidity provider MetaStreet, getting $8.3 million without the need to sell his assets.
$8.3 million backed by NFT tokens
As NFTs become more widespread, the crypto community has found new use cases and utility for these digital assets, beyond representing ownership. Like going to a pawn shop, “0x650d” has used his NFTs on the NFTfi market to unlock liquidity. “0x650d” has a term of 90 days to repay the loan, with an APR of 10% according to the conditions established in the NFTfi contract.
On his Twitter account, “0x650d” thanked the MetaStreet team for helping him access short-term liquidity through a secured NFT loan; while continuing to preserve your digital assets. The crypto collection of 104 non-fungible tokens owned by “0x650d” was valued by Sotheby’s at between $20 million and $30 million in February.
— 0x650d (@0x650d) April 1, 2022
For its part, MetaStreet tweeted that investors and owners of non-fungible tokens have the ability to access the necessary liquidity. No need to sell your assets in a falling market.
Year-to-date, sales in the NFT market are down 49%, according to data from CryptoSlam. Although the CryptoPunks continue to be the most valued NFT collection in the entire crypto industry, the unit price of their avatars has decreased by 22% since last March. When they were trading at a low of 86.5 ETH, according to the Opensea market platform. At press time, the unit price of CryptoPunks is 67.3 ETH (about $200,000).
MetaStreet and NFTfi
MetaStreet is a decentralized autonomous organization (DAO) that provides liquidity to users using NFT collateral. From an NFT collateralized lending marketplace, such as NFTfi, MetaStreet can connect with non-fungible token holders seeking liquidity. In this way, the DAO enables its users to unlock the potential of new virtual economies. Leading venture capital firms such as Animoca Brands, Delphi Ventures, Alliance, Dragonfly Capital and others support the development of this organization.
For its part, the NFTfi secured loan marketplace platform is a peer-to-peer marketplace that allows users to connect with others to access loans using NFT collateral. From this market platform it is also possible to serve as lenders for other users who require liquidity.
NFT, entrance to the DeFi world
NFT tokens are becoming the gateway to the DeFi space, Pantera Capital CEO Lauren Stephanian said in September last year. Also, the founder and CEO of the Kraken exchange, Jesse Powell, assured at the end of the year that the Kraken Digital Asset Exchange would offer NFT-backed loans in 2022. Powell stressed that non-fungible tokens are the new heritage in the crypto industry.
For NFTfi CEO Stephen Young, NFT owners can use their digital assets to access cash immediately. With this, they can participate in DeFi protocols to generate income or, alternatively, buy more NFTs to grow their crypto collections.
Among the most popular NFT collections that NFTfi supports for borrowing are: Bored Ape Yacht Club, Mutant Ape Yacht Club, Art Blocks, and VeeFriends, in addition to the CryptoPunks. In total, this NFT collateralized loan market receives non-fungible tokens from more than 150 collections.