The rapidly growing Defi service has been used as an opportunity by non-fungible token (NFT) owners to pledge their assets to make loans.
Fragment, NFT holder Mutant Ape Yacht Club (MAYC) has reportedly borrowed 1,000 Ethereum (ETH) worth $1.3 million using JPEG as collateral.
According to Gabe Frank, CEO of the NFT Arcade loan company, lenders will be more confident to underwrite larger loans because the price market has stabilized and the volatile situation has started to decrease.
This loan is also called a non-recourse loan, which means that the lender can seize the loan collateral in the event of unexpected events.
Among the borrowers who have borrowed from Fragment Mutant Ape are Nexo and Meta4 NFT Lending with the condition that the loan repayment is 1,044 ETH within 90 days at an APY* of 18%.
*Actual rate of return earned on investment taking into account the effect of compounding interest
If the borrower defaults, the lender can claim and sell the asset or keep it on the balance sheet.
Overall, such an idea allows one to get cash quickly and there has even been a significant increase in NFT lending since June 2022 with a peak value of $2.5 million in September .
