Michael Levy: How to Turn Your NFT Into a Loan

Michael Levy is simply a non-fungible token (NFT) capitalist and crypto entrepreneur, presently launching a portal for NFT-collateralized loans called Flowty. But Levy is not a diehard “crypto native” – and that’s precisely what makes him significant.

Rather than arriving successful the abstraction from the method broadside similar truthful galore existent leaders and builders, the self-described “relative normie” got sucked successful by pursuing a lifelong yen for sports collecting towards its logical future.

“Before I recovered NFTs, the astir passionateness I had for collecting was astir MLB bobbleheads,” helium told CoinDesk. “A person of excavation and I would prime retired a caller stadium each twelvemonth and question determination for a bobblehead game.”

This nonfiction is portion of Road to Consensus, a bid highlighting speakers and the large ideas they volition sermon astatine Consensus 2022, CoinDesk's festival of the twelvemonth June 9-12 successful Austin, Texas. Learn more.

That, of course, was earlier the COVID-19 pandemic. Like conscionable astir everyone else, Levy recovered himself bored during the early-pandemic lockdowns. But dissimilar noob traders who fired up Robinhood oregon Coinbase to capable the gaping existential void, Levy didn’t person to stray acold from his before-times pursuits.

“In September of 2020,” helium said, “I saw a tweet that the NBA had announced and released integer collectibles.” He instantly tried to motion up for NBA Top Shot, the video-clip NFT series, but the level was inactive successful closed beta astatine the time. Levy said helium finagled an invitation by messaging the Top Shot squad directly, joining erstwhile “there were astir apt 200 oregon 250 progressive users. Very aboriginal days.”

Top Shot rapidly became the archetypal genuinely palmy large NFT brand, generating immense interest and skyrocketing prices successful aboriginal 2021, before retracing significantly arsenic the broader NFT frenzy cooled. Levy’s aboriginal involvement paid disconnected big-time. But it wasn’t crypto expertise that opened his eyes to the opportunity.

“I looked astatine this arsenic idiosyncratic who collected sports cards increasing up,” helium said. “In galore ways, this is conscionable sports cards 2.0. They’re overmuch much shareable, and they’re fundamentally borderless.”

Of course, the cardinal quality is that you tin clasp a bobblehead oregon a shot paper successful your hand. But arsenic a seasoned collector, Levy doesn’t deliberation that’s a immense distinction.

“If you interruption down what makes a carnal entity charismatic to you … a lot, if not each of those aforesaid principles use to integer assets,” helium argued. “What makes it meaningful is not the carnal cardboard, not the image, not the absorption that the representation evokes. It’s simply that it signals to radical astir you that ‘I’m a hoops fan, I worth scarce objects and I similar this subordinate and I similar this team.’”

But crypto besides makes it imaginable to bash brainsick caller things with those collectibles, specified arsenic easy utilizing them arsenic collateral for loans. Levy’s caller Flowty level is meant to marque that easy, and its peer-to-peer quality partially addresses the large situation of however to worth these volatile integer assets arsenic collateral. The reply is simple: Flowty lets users decide.

“You prime an NFT from your inventory and you input the [loan] parameters you’re looking for. You mightiness say, I person an NFT. I deliberation it’s worthy $5,000. I privation to get $2,000 against it, and I’m consenting to wage 3% implicit a 30 time period. And if [a lender is] comfy with the offer, they are escaped to money that loan. Then lenders either get the indebtedness paid backmost oregon they get the collateral [NFT], and the counterparty can’t bash thing hostile. It’s each trustless and decentralized.”

There are concerns that financializing NFTs could person unpredictable marketplace impacts oregon summation holder risk. But arsenic Levy points out, erstwhile you get past the technology, Flowty isn’t doing thing each that radical. “You tin instrumentality a ticker oregon a coating to a pawn store and get a loan. It’s a very, precise akin transaction.”

One uncertainty Levy sees for the NFT beingness is the method situation of “bridging” assets from 1 blockchain to another. Flowty, similar Top Shot and CryptoKitties, is built connected the Flow blockchain. “As a comparatively mainstream idiosyncratic myself, Flow is approachable and user-friendly, and aligned with these immense brands,” Levy said of the network’s halfway appeal.

But that ease-of-use comes with trade-offs, including “giving up immoderate decentralization and security,” Levy said. That tin beryllium mitigated by connecting to different blockchains, but immense caller hacks of connecting “bridges” similar Ronin and Wormhole person formed uncertainty connected the viability of specified “cross-chain” connections.

“It mightiness conscionable beryllium recency bias, but a batch of radical person said if we can’t lick the span issue, it mightiness not upwind up being a [cross-chain] future,” said Levy. If that thesis holds up, Levy thinks determination volition beryllium semipermanent consolidation arsenic isolated chains suffer utility. “There volition beryllium spin-offs and alternatives, but astir apt a radical of 4 oregon 5 that look implicit time,” helium noted.

Naturally helium thinks Flow, and its room of infamous dunks, volition beryllium 1 of them.

The Festival for the Decentralized World

Thursday - Sunday, June 9-12, 2022

Austin, Texas