NFTs will soon merge with DeFi.
As the ecosystem evolves, the illiquid nature of NFTs is being solved. It is only a matter of time before the tracks meet.
It is common to consider NFTs and DeFi as two different tracks responsible for bringing users into the cryptoverse. However, as the ecosystem evolves, the two ecosystems will merge, and defi will be the primary engine driving.
Let's deep dive!
NFTs have had a pleasant 2021 so far with over $2.5B sales volume in first half of 2021. Considering heightened user interest and speculation, floor prices for various collectables have skyrocketed.
Visa, Coke, Playboy, Burger King, Garyvee, Astun Kutcur, Stephen Curry, Lady Gaga, Lindsay Lohan are only a few names riding the NFT wave and leveraging the technology to engage with users and fans while monetizing their work.
With how nascent the technology is, it is only the beginning.
The user interest around NFTs will continue to rise, with celebs and brands acting at the top of the funnel to bring in more users. But once the users enter the space, they will soon realize the illiquid nature of most NFTs apart from the popular ones. Making some users flee, hating their speculative and irrational decisions, while the others stay back.
The beauty of any new market is the pace of innovation and the possibility of identifying and bridging gaps faster than saturated markets. Crypto is one such market, and the illiquid nature of NFTs is one such gap.
Over the last few weeks, several new products have ventured to close the gap with their unique approach. The core of these solutions is to build on existing models and introduce compostability with NFTs.
Let's look at the top picks!
NFTfi
Backed by some of the leading funds. The platform is a marketplace with borrowers and lenders. The borrowers can get loans by using their NFTs are collateral and receive ETH in return. If unpaid, the NFT will go to the lender.
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The platform has a relatively unique approach where users can lock the collectables to generate a stable coin $PUSD. Users can then use the PUSD across networks in farms, staking etc., to generate further yield.
Fractional
Fractional is another use case that allows multiple users to hold the portion of NFTs - making the underlying token tradable and more capable of using it across the DeFi ecosystem.
We are just getting started.
As the ecosystem evolves, the two tracks will become one where NFTs will be an extension on top of the existing DeFi ecosystem, albeit with a wider net to attract more users into the space.