Fast loans at NFT.
Today me and serp1337 will tell you where to get the liquidity without selling your solana/eth staf, which you took at the stake of a hidden informer and still counting on the hard pamp and the golden mountains.
How lending works.
Not enough liquidity again to take another rag off all your wls?
Don't know who to borrow sol to flip?
Then, you're at the right place.
You've probably heard about Aurigami's lending, where by sending your tokens to staking, you could lend tokens like $NEAR for interest. You can read more about it here.
In short, crypto already has enough experience in lending against the collateral of something. So the next step is a loan from NFT.
How convenient it would be if you always had a client who didn't mind lending you money, and if you succeeded, he would profit a little from you, and if you failed, he would be sure that you would pay it all back.
But unfortunately not everyone has such friends, then we can be helped by secured lending NFT.
Lending on Solana.
SHARKY
Sharky is a service that allows you to borrow against the security of NFT.
Suppose there are two enthusiasts, user A and user B. A has solana, which he does not need yet, and user B has pictures that he holds on the stake of the hidden informant from the DAO vacuum cleaner, but B urgently needs a liquidity. What should he do? The logical option would be to sell, but what if the hidden informant was right, and tomorrow his pictures would be worth as much as a trip to Bali? Then comes the decision to borrow. Sharky is precisely the bridge and guarantor between such degens. User B finds Sharky, finds his pictures there, as long as they are liquid, and user A lends him money against his pictures. How's that sound? Great.
At the moment the transaction is created, the platform freezes the NFT of our user B and gives him a solana from our user A, and the NFT themselves remain in the wallet of user B, they just can't be sold or transferred. Then you can repay your 'loan' + 'interest' at any time, before the end of the loan period.
Losing the NFT. Unfortunately, Sharky isn't your guy who can wait until you have the money to give it all back. When the rental period is over, you have to say goodbye to your jpeg. That's probably the only risk, so it's worth remembering that you're taking a secured loan.
Note that the Best Offer column is how much you will get, Interest is the percentage you will have to add on top when you return, and Duration is the period for which you can pledge.
2) Select NFT from the list of available ones and press 'borrow'.
Congratulations on taking out a web 3 microloan 🎉
If someone borrows, then someone acts as a creditor. Accordingly, you can become a creditor. The percentage that you will receive from this depends on the collection. You can check it here.
Pros and cons of Sharky:
- Minimum loan term is 7 days. You can return early, but you'll pay for 7 days.
FRAKT
FRAKT is essentially the same as Sharky, but with more functionality. So what's the difference?
FRAKT offers two types of loan.
In the first case, you can borrow indefinitely and pay a fixed percentage once a day, but there is a possibility of losing your jpeg not only because there is no money to repay the loan, but also because the flor on your collection will fall, and then your NFT will be liquidated)
In the second case, you take a loan for a predetermined period of time, just as you do for sharking. I have already explained above how this works.
FRAKT also leaves you your NFT in your wallet, but you cannot sell or transfer it. This is convenient in case you need this NFT to stay in Dao, etc.
Pros and cons of FRAKT:
Lending on Ethereum
Well, how do you get credit if you're not a solana boy? Or rather, what do you do if your NFT is only on Ethereum? Well, you must be fucking rich, so let's treat the following information as personal_private_advisory_advice!
Bend DAO
Bend DAO is a decentralized Blue-Chip NFT crediting protocol. What's the difference with Solana protocols? Because here you can only borrow against Blue-Chip NFTs, specifically NFTs from the Bored Ape Yacht Club, CRYPTOPUNKS, Mutant Ape Yacht Club, Moonbirds, Azuki, CloneX, Space Doodles and Doodles collections.
In addition, you can borrow ETH, or lend ETH, by staking a native $BEND token.
But nevertheless, in this article we deal with Borrowing money for NFT. And so, how to borrow $ETH against NFT on BEND DAO?
1) Go to Bend Dao, scroll down a little bit, choose our collection and click Borrow ETH:
2) Choose the NFT token you want to borrow against (hard, but you can do it):
3) Choose a loan amount and read the terms of the loan!
Liquidation Price - Floor Price at which liquidation will happen and our NFT will be sold.
Borrow APR - annual percentage of the loan.
Health Factor - the health level of our loan. If it becomes <1, then our NFT will be put up for auction, so that some good guy will buy it and pay off our debt.
4) Give approve on Loan and NFT.
Pros and cons of the Bend DAO:
- Limited choice of collections for the loan
- Loan terms may change "on the fly" (read more here)
- NFTs don't stay in the wallet when borrowing, but go to a smart contract.
Conclusion
Lending is a great way to get extra liquidity if you handle it right.
However, be aware of the risks: any protocol can be hacked. Any protocol can be "closed".
NFT markets are still volatile, so it's easy to catch a liquidation.
I would like to say a huge thank you to valpaq.eth - the dude develops FRAKT and with great pleasure answered all our questions!
Personally, we (Bedolaga Capital and serp1337) use credit to get liquidity for a flip or some sort of sale, while not losing $SOL or $ETH when selling/buying NFT and staying in position (so as not to lose access to DAO/stacking).