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Borrowing Against a Bored Ape NFT—What Goes Wrong?

orrowing Against a Bored Ape NFT What Goes Wrong

Non-fungible tokens (NFTs) are getting a major facelift.

Robness V2 tweeted earlier this week, “Life was a whole lot better when you bought a jpeg, enjoyed the jpeg, and didn’t expect anything to come with it.”

It is a comment on NFTs as just pieces of art; pet-rock mediocrity. On the blockchain, they were to be admired in all their pixelated magnificence.

Perhaps, they were occasionally traded, with owners marking the end of an era when ownership changed hands.

But that was it: crypto art with no extras.

Nonetheless, startup after startup is releasing a plethora of extras, granting NFTs access to Discord channels, fractionalizing them, rehypothecating them, and increasing leverage. The list is exhaustive.

In tandem with the growing use of NFTs, a new specialization involving the application of diverse DeFi technologies to drawings of monkeys and penguins is emerging. It is called NFTFI, and it expects that these tokens will evolve into the much-touted “money legos” that can be plugged into other protocols to make those pet rocks more capital-efficient.

Let’s examine the application of some of the most important DeFi concepts to NFTs.

There is a program for that

Lend and borrow have always been the financial lifeblood. Cryptography is not an exception.

This market is one of DeFi’s largest, encompassing both the earliest DeFi platforms, such as Aave and Compound, and newer platforms, such as Euler and Notional.

It is currently entering the NFT market. BendDAO, ParaSpace, JPEG’d, NFTfi (the brand, not the category), and a flurry of other startups have emerged, allowing you to pledge your NFT as collateral in exchange for the use of another commodity. This enables enthusiasts to improve their cash without selling their prized Doodles.

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About MahKa

MahKa loves exploring the decentralized world. She writes about NFTs, the metaverse, Web3 and similar topics.

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