Amongst the wide range of products and services offered by Binance, one that most may not know about is the NFT-Fi (NFT + Finance) which is said to be unlocking the untapped potential, opportunity, additional value, and liquidity of Non-Fungible Tokens (NFTs).
What is Binance NFT-Fi
It is "an intersection (bridge) between Non-Fungible Tokens (NFTs) and Decentralized Finance (DeFi) which offers staking and loan services."¹
NFT-Fi also opens up financial solutions to tap into the hidden liquidity of NFTs. By enabling fractionalization, tokenization, lending, and using NFTs as collateral, NFT-Fi can unlock the potential of these valuable digital assets. At the same time, NFT users do not necessarily need to sell their assets to enjoy the benefits.²
Binance NFT-Fi offers NFT Staking and NFT Loan. Further information below.
NFT Staking
This allows users to lock their NFTs in smart contracts and earn daily rewards. This enables them to monetize their NFT assets without selling them. Staking NFTs on Binance is simple with just a single click. In addition, the process does not incur any gas fees.
🔶APE Staking
Users with any of the supported NFTs can deposit and stake them to earn ApeCoin (APE) tokens. Users are not required to hold APE to be able to stake.
Deposit and stake Bored Ape Yacht Club (BAYC) and earn up to 31.05% APR or a daily reward of 8.5868 ApeCoin.
Deposit and stake Mutant Ape Yacht Club (MAYC) and get a daily reward of up to 2.0073 APE or 35.88% APR.
Staking Terms include Flexible, 30 Days, 60 or 90 days. Unstaking the NFTs on Flexible terms need 2 reward calculation days (48 hours) of notice for rewards redemption.³
Bored Ape Kennel Club (BAKC) staking incoming soon.
🔶Sandbox Staking
Deposit and stake LAND NFTs by The Sandbox on the Polygon network and earn $SAND.
Flexible staking is the only available option with APR up to 6.40% or daily rewards of 0.3506 SAND.⁴
Users can unstake the NFT at any time but it will be available after 48 hours from the time the unstaking is initiated.⁵
NFT Loan
This is a type of loan that allows users to instantly borrow funds (in the form of ETH) from Binance using NFTs as collateral at zero gas fees, liquidation protection, and low-interest rates. Binance is offering a 20% discount on loan interest rates from the 5th of July.⁶
This overcollateralized, open-term, and peer-to-pool loan feature offers distinct Loan-to-Value (LTV) ratios for each NFT collateral-loan pair position. The loan amount is based on the value of the NFT and the LTV ratio, which determines the maximum amount of credit issued based on the NFT’s value.⁷
In simple words, each NFT Loan must be overcollateralized, which means the value of the NFT pledged as collateral must exceed the value of the crypto or digital asset that a user is borrowing.
Supported NFT Collection
Currently, Binance accepts the following blue chip NFTs as collaterals for any NFT Loans.
- Bored Yachts
- Mutant Ape Yacht Club
- Azuki
- Doodles
NFT Loan Terms
The loan terms are open-ended which means borrowers can have their loan indefinitely as long as the collateral NFT and the relevant Loan-to-Values are supported and not exceeded or the loans are not liquidated.
Borrowers can pay the loan in partial amounts but the remaining will still incur interest.
In the event of loan liquidation, full repayment is required for the user to be able to regain ownership of his NFT.
Obviously, there is an associated risk when taking an NFT Loan due to volatility and price fluctuations. When the value of the NFT drops significantly, the loan can get liquidated.
Summary
NFT-Fi is a new and emerging ecosystem in the crypto industry. It is allowing NFT holders to benefit from their assets by connecting and or bridging them into DeFi.
Binance NFT-Fi is one that enables the use of NFTs in two ways: NFT Staking and NFT Loan. Supported collections are the popular ones - BAYC, MAYC, Sandbox on Polygon.
While staking assets can be a sound option, there are still associated risks so one must do his own due diligence before locking up NFTs.
Borrowing against an NFT can be extremely risky too as price volatility can cause loan liquidation.
Info Sources: Binance NFT-Fi / FAQs / Blog / NFT Staking
DISCLAIMER: For infotainment only. Nothing in this post is meant to be construed as financial or investment advice.
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