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The Best Platforms to Use Idle NFTs as Loan Collaterals in 2022

NFTs are everywhere. The digital tokens have come to become a very prominent part of the crypto/blockchain market and with big names such as BAYC, CryptoPunks and others running in value in hundreds of thousands of dollars, the investments are sound. Whether you want to flip these or hold them for long-term appreciation, there is no denying their significance.

Buying NFTs can be a substantial investment and can yield good results. But like all long-term investments, they lock up liquidity. That’s money you could use in trading or just about anything. Normally you would sell these, but did you know there is another way? There are platforms out there that allow you to put up your NFTs as collateral and get crypto loans. 

Seems interesting, right? Here are a few top NFT loan platforms that you can leverage to make the best of your NFTs’ value.

  1. NFTuloan

Topping our list is NFTuloan, an impressive project with even more impressive services. The project’s complete philosophy is summed up with its first sentence, ”Don’t sell your NFT, get instant liquidity with us!”.

The platform claims that automated instant loans are made out against a variety of NFTs, including art, collectables, music, trading cards, metaverse and even domain names. Unlike other competitors that rely on peer-2-peer lending, NFTuloan offers a peer-2-pool protocol. This means that NFT owners do not have to wait for anyone to accept their NFT as collateral and they can instantly obtain a loan from the lending pool.

Pros

  • Highest LTV in the market (70%).
  • Instant on-chain evaluation.
  • 200 NFT collections supported.
  • Insured pools.

Cons

  • Loans in ETH only.
  1. Bend DAO

Second on our list is Bend DAO, a platform very much like NFTuloan in its operations. Users can deposit their NFTs for loans or take part in the P2Pool to lend their ETH.

The platform, as its name suggests, is a DAO and acts as a non-custodial service, with the aspects of operations controlled by the community members. But this is where the similarities end. Bend DAO only supports a limited number of NFT projects (6), limiting itself to the untapped potential in the market.

Pros

  • Non-custodial.
  • Transparent operations.
  • Instant loan through P2Pool.

Cons

  • Low LTV (30%).
  • No insurance.
  • Only 6 NFT collectibles are supported.
  1. NFTfi

The South African NFT lending and borrowing platform shot to fame last year as it gained $5 million in funding from different VCs, including Aston Kutcher’s Sound Ventures. Like all NFT lending platforms, this one is also decentralized and uses smart contracts to execute the loans and returns.

However, being one of the earliest platforms, it is built on P2P lending and lenders have to manually browse through listed NFTs and accept offers. This puts lenders at a greater risk as DYOR comes into play and they have to evaluate their own risks.

Pros

  • 150 supported collectibles.
  • 40% LTV for NFT owners.
  • Supportive community for new borrowers and lenders.

Cons

  • Loans only in wETH or DAI.
  • Simple P2P protocol. Moneylenders have to match the LTV value to give out loans.
  1. Arcade

Using the custom-built Pawn Protocol has helped Arcade become a major player as it is specifically aimed at the NFT lending sphere. Bespoke appraisals of NFTs, multiple loan terms for NFT owners and different lending requests for lenders (accepting open requests and putting up counteroffers).

One thing that differs is that the lender does not get hands on the NFT, but a wrapped NFT (wNFT).

Pros

  • Expanding range of supported NFTs.
  • ERC20 assets such as wETH, wBTC can also be used as collateral.
  • Borrowers can get any ERC20 token, as long as the lender is willing to give.

Cons

  • Arcade’s website clearly states its “experimental” and offers no liability or insurance.
  • No liquidation of assets in case of default.
  • Extremely low LTV (4%).

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