The comprehensive guide to lending and borrowing $SOL using an NFT as collateral.
By Poised Wolf, For the Community, Special Thanks to Wagg.
NFT-FI or NFT-Finance is an infrastructural part of the NFT and digital asset ecosystem. NFT-Fi is NFT DeFi! Lending, renting, fractionalization, and liquidity for NFTs.
On Solana, NFT-Fi is predominantly: Lending and Borrowing of SOL using an NFT as collateral. NFT holders use their NFT to borrow SOL from a lender in a decentralized, permissionless p2p transaction.
The loan begins by a lender making a loan offer (on a specific NFT collection) and a borrower choosing to accept that offer.
This Collateralized NFT Loan must be repaid at an agreed:
If the loan is not repaid within the Duration, the NFT collateral will return to the lender as a foreclosure.
While there is considerable risk in Lending and Borrowing on volatile assets; there is also commensurate reward via attractive returns for lenders and the ability to get liquidity/hedge for borrowers.
Borrowers borrow crypto from a lender using their NFT as collateral, and lose that NFT if they don't repay the loan . As a borrower, you have the option:
Borrowers can borrow SOL with their NFT as collateral in lightspeed to hedge their investment or access liquidity against their NFT.