Image courtesy of Binance Twitter page
The Binance NFT Loan feature allows users to borrow Ethereum (ETH) without having to sell their NFTs.
Binance has added a host of features that make it a one-stop shop for NFT trading and financial services for the community.
In an interesting development, crypto exchange Binance is allowing users to borrow loans by placing their NFTs as collateral. The platform released a new non-fungible tokens (NFT) loan feature, the first by any major player in the industry.
This loan feature from Binance specifically caters to those who are in need of quick funds but don’t want to part with their NFTs. Binance will leverage a “Peer to Pool” mechanism wherein the Binance NFT platform will act as a loan pool.
Additionally, Binance said that the platform will offer zero gas fees along with the ability to borrow Ethereum (ETH) without the need to sell assets. With Binance NFT acting as a loan pool, the amount of ETH that users can borrow will depend on the floor price of their NFTs.
Data for the system shall come from multiple sources such as NFT marketplace OpenSea and Oracle service Chainlink (LINK). As of now, the Binance NFT loan feature supports four well-known collections. Commenting on the development, Binance said:
Initially available with select high-profile NFT projects such as Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Azuki, and Doodles, the innovative feature introduces the benefits of decentralized finance (DeFi) to the Binance NFT community. More collections are expected to be added in the near future.
Binance NFT Eyeing Expansion in the Future
Crypto exchange Binance said that it plans to expand its NFT loan services in the future. Mayur Kamat, head of products at Binance, said that the new feature shall provide new liquidity options for holders. This would “allow them to participate in the market without having to let go of their precious NFTs.” He added:
We’ve added a host of features that make it a one-stop shop for NFT trading and financial services for our community,
In order to become the top NFT loan service in the future, Binance will be competing with the world’s largest NFT trading platform Blur.
Earlier this month on May 2, Blur launched Blend — its own peer-to-peer lending protocol for NFTs. Currently, Blue alone dominates a staggering 82% of the entire NFT loans market. Additionally, the platform has recorded over US$308 million in loan volume within just the first twenty days of launch, as per the date from blockchain data aggregator DappRadar. In an email to Forkast, Brendan Humphries, head of business at peer-to-protocol NFT lending platform Pine Protocol said:
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The continuous nature of Blend’s loans has proven attractive to traders seeking additional leverage. Products like Blend contribute to the continued maturation of the NFT market, increase market efficiency, and make the space more attractive to new entrants seeking sophisticated products and tools.
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