Solution of NFTS's liquidity problem: Can the financialization help?

Solution of NFTS's liquidity problem: Can the financialization help?

increasing sales quantities and acceptance. However, there is a bottleneck in the aspiring area behind the explosive growth, which, according to industry participants, such as Daniel Yan from Matrixport Ventures, could be alleviated by new financial shifts.

Large brands such as Nike, Adidas and Louis Vuitton jump up on the blockchain-based collector's trend, and the number of NFT buyers (non-fungible tokens) reached an all-time high of 895,000 Cryptoslam . But that's not the whole story, said Yan to Blockworks.

"When we talk about growth on the NFT market, we talk about the trading volume in marketplaces, mainly OpenSea," said Yan.

"The volume is much higher [than a year ago] but what does not really grow with it at the same time is the liquidity of NFTS."

Take cryptopunks. There are about 10,000 on the peer-to-peer market, each with its own price. "It is quite difficult to summarize this liquidity," he noted.

NFT financing table such as lending, fractionation, renting, pricing and aggregation of assets could help to solve this Last report from the digital-asset company Matrixport.

The peer-to-peer-nft credit platforms and liquidity providers include NFTFI, Arcade and Metastreet. NFTFI has drawn more than 5,000 loans since 2020 and, according to the report, has a cumulative loan volume of $ 80 million.

Arca portfolio manager Sasha Fleysman told Blockworks that NFT-supported loans "could enable people to use their capital more flexibility".

According to Fleysman, such loans could help people access the value of severely increased assets, but without selling them and possibly triggering taxable events. Many also hang on their NFTs and do not want to separate from them.

Last week Metastreet and NFTFI enabled the largest NFT-supported loan of $ 8.32 million for $ 104 cryptopunks. The loan has an interest rate of 10 % (APR) with a term of 90 days, reported block works exclusive.

nexo, a great crypto loan, also announced that he introduced an NFT-supported loan shell last year. However, the service currently only accepts Blue chip collections such as Bored Ape Yacht Club (BayC) and Cryptopunks.

Although the industry participants quickly explore further financial classes of the asset class, NFT-supported loans make up less than 1 % of the total addressable market (TAM).

"The first step in this way is to find a solid base line on the derivative markets where they are currently being worked on - fungal representations of collections," said Fleysman. "And if this market is expanding- it is usually 5 to 10 times larger than cashewatermarks ... and solidifies, we have a liquid observable price that protects loan shellers, which means that they can offer more attractive interest rates."

that, according to Fleysman, will attract more buyers.

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Solve NFTS's “Liquidity Problem” contribution: Can financialization help? is not a financial advice.