Nexo Pioneers NFT-Backed Lending Services

December 18, 2021, 10:00 AM AEST - 4 weeks ago

Market-leading crypto lending specialist Nexo has teamed up with Singaporean hedge fund Three Arrows Capital to launch its new NFT-backed lending services. Clients will now be able to borrow digital assets and use NFTs as collateral.

Nexo Accepting Bored Apes and CryptoPunks, For Now

Initially, only those who hold Bored Ape Yacht Club and CryptoPunks NFTs will have access to the service, however the company plans to add more down the line.

For a company wanting to provide liquidity to NFT holders, this decision makes sense as prudence would suggest that if you’re going to allow clients to borrow against their NFTs, best you make sure that those NFTs have a reasonable prospect of sustaining value into the future.

Nexo recognises that even so-called “blue chip” NFTs are potentially overheated, and this is reflected in its conservative offering:

  • minimum value of NFT must be US$500,000;
  • interest-only loan with rates between 12-15 percent; and
  • loan to value ratios between 10-20 percent.

Nexo co-founder Antoni Trenchev recognised that NFT use cases would continue to proliferate and, in due course, so would their services:

An NFT can be anything and can provide so many functions … in the future, we’ll be providing loans and financing people’s purchase against anything from digital real estate, to gaming items, or even limited-edition Nike sneakers.

Antoni Trenchev, Nexo co-founder

Year of the NFT

This has undoubtedly been the year of the NFT – it fact it was 2021’s word of the year. In a relatively short space of time, we’ve seen the space mature as investment into NFT infrastructure and gaming continues to soar. By way of example, the world’s first NFT-related ETF was launched earlier this month.

But not everyone is excited about NFTs. Many regard them as useless JPEGs, tacky displays of wealth, or a bubble reminiscent of the dot com era. Doubters can now put their money where their mouth is and short NFTs. Arguably, that requires more bravery than buying one.

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