[ad_1]
According to reports, South African startup NFTfi recently raised $5 million, and the company intends to use the funds to promote its non-fungible token (NFT) mortgage business.
Cryptocurrency loan market
According to Techcrunch report, NFTfi’s US$5 million financing was led by Sound Ventures of American actor Ashton Kutcher. Other investors participating in this round of financing include Maven 11, Scalar Capital and Kleiner Perkins.
The company was founded by Stephen Young in February 2020 and has become a market where users can obtain NFT cryptocurrency loans and provide NFT loans to borrowers. The report explains that by staking their tokens, NFT holders will be able to release liquidity without selling them.
Since facilitating its first loan in May 2020, NFTfi claims to have conducted more than 1,500 such transactions on its platform.
Pricing dynamics
The report quoted Young as saying how the borrowing process started and what would happen if the borrower defaulted. In the same report, Young also outlined the dynamics of pricing between lenders and borrowers on NFTfi. He said:
The lender wants to leave some space between the asset price and the loan amount. This is because in the event that someone defaults, they need to be able to sell it at a price lower than the market value, and the price may fall in between. So this is why they need such a large buffer between the value of the loan and the value of the actual asset.
Young revealed that although 20% of loans on the NFTfi platform are in arrears, these are mainly loans of lower value. According to the founder of NFTfi, this is mainly because high-value NFTs are very unique and difficult to obtain. Therefore, users will fund the loans they want the borrower to default, thereby handing over the NFT.
The top NFT loans on NFTfi span popular digital collectibles on the Ethereum blockchain, including Art Blocks, Bored Ape Yacht Club, Cryptopunks, Autoglyphs, Meebits, and Vee Friends.
What do you think of this story? Tell us what you think in the comments section below.
Image Source: Shutterstock, Pixabay, Wikimedia Commons
Disclaimer: This article is for reference only. It is not a direct offer or invitation to buy or sell, nor is it a recommendation or endorsement of any product, service or company. Bitcoin Network Does not provide investment, tax, legal or accounting advice. The company or the author is not directly or indirectly responsible for any damage or loss caused or claimed to be caused by using or relying on any content, goods or services mentioned in this article.
[ad_2]
Source link
