CoinEx Institute | From NFT to NFT-fi: Real Demands or False Propositions?

Figure 1: Market Cap & Volume of NFTs. Source: nftgo.com, as of June 1, 2022
  1. NFT fragmentation: FT tokens (such as ERC20 tokens) that are issued by dividing the ownership of valuable NFTs. NFT fragmentation projects include Fractional.art, NFTX, etc.
  2. NFT lending markets: Holders can borrow short-term loans by collateralizing their NFTs without selling them. Prominent NFT lending markets include BendDAO, NFTfi, and Drops DAO.
  3. NFT leasing: Holders earn rents by leasing NFTs to users in need. NFT leasing projects include Double, reNFT, etc.
  4. NFT aggregators: These aggregators, such as Gem.xyz, bring together the transaction data of multiple NFT exchanges, obtain the best NFT transaction price in one stop, and provide users with increased liquidity and more options.
  5. NFT derivatives: NFT derivatives include NFT options like Putty, as well as NFT perpetual futures contracts such as NFTprep.

Real Demands

  1. The capital utilization of NFTs needs to be improved, allowing holders to collateralize their NFTs for partial liquidity when running out of cash.
  2. The liquidity problem of NFTs should be addressed, enabling holders to quickly buy/sell the NFTs they own.

False Propositions

Did the capital utilization of NFTs go higher?

Figure 2: New Addresses and Transactions of NFT Aggregators. Source: Dune @sohwak
Figure 3: Bend ETH Utilization. Source: Dune @cgq0123. Note: MA14 refers to the moving average in 14 days, while MA7 indicates the moving average in 7 days
Figure 4: NFTfi Monthly Loan Volume by Count/Value. Source: Dune @gideontay
Figure 5: Bend ETH Borrowers & Depositors. Source: Dune @cgq0123

Conclusion

The evolution from NFT to NFT-fi is a process in which a market grows from its infancy to a more mature stage. However, it is also inevitably a process that’s full of doubts, traps, and problems. As NFT-fi projects seek to meet real demands, they will also have to face doubts that they are stating false propositions. Today’s NFT market is like a newborn child who needs to grow up and stick through challenges. Although NFT-fi might be a great attempt, there is still a long way to go, and NFT-fi projects have to keep exploring their underlying logic to earn market recognition.

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