DeFi borrower uses luxury watch-backed NFT as collateral for a loan

A nonfungible token (NFT) collector shared the communicative of however a decentralized concern (DeFi) indebtedness was collateralized done a luxury ticker and was facilitated with an NFT representing the asset. 

On July 11, pseudonymous DeFi task advisor CirrusNFT explained however a idiosyncratic was capable to get $35,000 from different idiosyncratic by utilizing an NFT that represented a carnal point arsenic collateral for the loan.

According to the exec, a idiosyncratic sent a Patek Phillipe luxury ticker to 4K Protocol, an escrow steadfast that deals with NFTs backed by carnal items. The institution past sent backmost an NFT that represents ownership of the watch.

Patek Phillipe ticker utilized arsenic collateral for DeFi loan. Source: Arcade.xyz

The NFT was past listed connected the DeFi lending protocol Arcade. After listing the item, lenders pitched their offers to the borrower. The idiosyncratic past accepted the champion indebtedness connection they could find. Following this, the NFT was sent to an escrow wallet, wherever it would enactment until the indebtedness is paid successful afloat oregon if the borrower defaulted. If the borrower fails to wage the loan, the NFT volition beryllium awarded to the lender. It tin past beryllium burned to assertion the watch. 

CirrusNFT explained that done this process, users tin lend and get with implicit anonymity. Lenders and borrowers bash not request to taxable their names to each different to spell done the process. In addition, the enforcement believes that this allows radical to person entree to much planetary liquidity, which whitethorn connection much competitory rates.

Related: Blue spot collaterals assistance stabilize NFT lending: Paraspace

A assemblage subordinate expressed affirmative sentiments astir the Web3 lending process, tweeting that the communicative piqued the involvement of their dad, who called it “interesting.”

Community subordinate sharing their thoughts connected the matter. Source: Twitter

While immoderate welcomed the caller mode of lending and borrowing, others believe that it’s precise centralized and is adding NFTs wherever it’s not necessary. 

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