In crypto, DeFi and NFT are two separate distinct niches with separate uses. However, despite the prevailing differences in both, it appears Ethereum innovators have been able to find a middle ground for both classes as it appears in this report.
A few months ago, an NFT collector approached the NFTfi platform (a defi platform) to take a 3.5 ETH loan (an equivalent of $12,600) and put up his “Elevated Deconstructions” NFT which were trading for around 11 ETH at the time. However, the last sale for that NFT was 3.25, which at that time translated to $11,700 and was, more importantly, below the loan’s value.
Interestingly, upon expiration of the loan tenure, the NFT has not only become much more popular — thanks to endorsements from NFT collectors like Snoop Dogg’s pseudonymous Twitter account and Punk 6529– but its value has also risen to as high as $342,000. This means the collateral was passed to the lender who ended up gaining an NFT whose current base price is 95 ETH for a 3.5 ETH loan.
Available information shows that the NFT has twice been used as a collateral for DeFi loans and in both cases, the borrower defaulted on the loan.
In the first loan, the NFT was used as a collateral for a 3 ETH loan which was defaulted on in April. In the second loan, it was used as a collateral for 3.5 ETH that was also defaulted upon.