Wealthy NFT owners take out loans that are supported by bored monkeys, cryptopunks

Wealthy NFT owners take out loans that are supported by bored monkeys, cryptopunks

Wealthy private individuals who have long been used to taking out loans against Picassos and van Goghs now use bored apes and cryptopunks as cash storage.

As the latest sign that digital art and collector's items come to the financial mainstream, a NFT collector presented two rare zombie cryptopunks as security for a loan of $ 3 million this week, which was made possible by a peer-to-peer loan arkade .

The NFT platform (non-fungable token) specializes in bringing the owner of blockchain art together with potential lenders. According to CEO Gabe Frank, Arcade NFTS worth more than $ 20 million in trust.

The financing conditions of Arcade, said Frank, are comparable to art loans - a market where hedge funds and other asset managers take on loans on behalf of wealthy private individuals who collect art. The Bank of America, for example, has more than $ 10 billion in such loans.

"It looks very similar to this model in that the wealthy collector wants to use their bound capital more efficiently," said Frank. "[For Them] depends on capital efficiency, the ability to have leverage [their] assets and either buy more NFTs or invest somewhere else to earn a higher interest rate than a interest rate for a loan."

The model throws credit tests and reserve assets out of the window, as both borrower and lender pay the loan without trust, apply self -storage and keep the transaction in the chain.

The Arcade loans usually have a term of three months and demand 20 % interest annually - less than credit cards, but still steeper than other bank loans. The fees vary, partly dependent on the liquidity of a NFT.

"This is our niche, this high-end longtail market," said Frank. "We offer this (excessive) type of service for wealthy collectors who want to secure their assets. It looks similar to Sotheby’s."

Noah Gaynor, CEO of the NFT marketplace Parcel, told Blockworks that this was another sign that "various protocols and primitive [are] bridging by Defi and NFTS."

gaynor added: "NFTs should be treated as well as all other assets, including their use as security."

arcade only supports ether-based NFTs with acceptable collateral that range from virtual plots to blue chip collections such as Bored Ape Yacht Club and Cryptopunks.

"We think that [Around] 95 % of the NFTs are probably not worth anything," said Frank. "But it is the upper 5 % like the cryptopunks and the monkeys that have a market capitalization in billions of billions that have a lot of stamina."

Other crypto companies follow up in the NFT loan.

crypto loan Nexo Started his first NFT loan switch in December and also accepted Bored Apes and Cryptopunks as collateral.

"An NFT can be everything and offer so many functions," Antoni Trenchev, co -founder of Nexo, told Blockworks. "[In The Future,] We provide loans and finance the purchase of people for everything, from digital real estate to game articles to nike gates in limited edition."

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