Amid intense competition in the non-fungible (NFT) marketplace caused by the unprecedented rise in popularity of Blur, the Binance crypto trading platform has unveiled its new initiative, NFT loan. With the new feature, users could leverage their NFT collectibles as collateral to borrow crypto assets from the exchange.
Using NFT To Borrow Crypto
The latest development highlights Binance continued drive to explore the NFT market by leveraging the popularity of the digital collection ecosystem. Following the introduction of its NFT marketplace in June 2021, this newly introduced NFT lending functionality empowers users with convenient and rapid access to funds, eliminating the need to liquidate their NFT holdings.
Individuals can now effortlessly borrow cryptocurrencies by utilizing their digital assets as collateral. Mayur Kama, the Head of Product at Binance, recently shared his view on the milestone, stating that the expansion of Binance NFT is now truly underway.
The firm has incorporated numerous features to create a comprehensive platform that caters to its community’s NFT trading and financial needs. With Binance’s already competitive fees and the assurance that comes with the Binance brand, the introduction of NFT Loans will provide a fresh avenue of liquidity for NFT holders.
Now, users can actively engage in the market while retaining ownership of their cherished NFT assets, Kama added.
DeFi Use
In the decentralized finance (DeFi) space, users will now have the opportunity to leverage a new functionality that enables them to borrow Ether (ETH), utilizing NFTs which the firm categorizes as “blue-chip” collateral. Digital collectibles from notable platforms like Azuki, the Bored Ape Yacht Club (BAYC), Doodles, and Mutant Ape Yacht Club (MAYC) are also acceptable on the platform.
Collectors who possess NFTs from any of these collectibles can leverage their assets as collateral to secure ETH loans. Furthermore, Binance assured users that NFT collections from other platforms not listed yet would be included in the “blue-chip” list, thereby expanding borrowing prospects for its users.
One primary benefit of this feature is that it unlocks the potential for users to tap into the advantages associated with DeFi within the Binance NFT community. Its “Peer to Pool” mechanism seamlessly integrates data from multiple providers, including Oracle service Chainlink and the widely recognized OpenSea NFT marketplace.
Like a loan pool, the Binance NFT marketplace utilizes the floor price of collateralized NFTs to determine the borrowing capacity of users.
No Transaction Fees
The emergence of the Binance NFT loan brings a notable benefit: the elimination of gas fees or Ethereum transaction fees. This aspect renders the solution highly cost-effective for users in need of liquidity.
Furthermore, according to information provided on the Binance NFT website, the current annual interest rates for NFT loans are set at 7.91%, with loan-to-value ratios spanning from 40% to 60%. Binance’s venture into NFT lending showcases its dedication to expanding its NFT-related services, a valuable complement to its NFT marketplace.
Since launching its NFT platform, Binance has consistently added new features to elevate the overall user experience.
