NFTfi South Africa, a startup, has recently raised $5M. This money will be used to boost its business collateralizing non-fungible tokens (NFTs).
The Cryptocurrency Loan Exchange
According to a Techcrunch report, NFTfi’s $5 million capital raise was led by U.S. actor Ashton Kutcher’s Sound Ventures. Maven 11 Scalar Capital was one of the other investors who participated in the round. Kleiner Perkins is another investor.
Stephen Young founded the company in February 2020. It acts as both a marketplace for users to get cryptocurrency loans on NFTs, and loans to borrowers with NFTs. The report stated that NFT owners will have the ability to sell their tokens and unlock liquidity by collateralizing them with tokens.
NFTfi has claimed to have processed more than 1,500 loans since May 2020 when it opened its first loan.
Young is quoted in the report explaining how borrowing and lending work, and what happens to borrowers who default. Young also describes the dynamic pricing of NFTfi between lenders, borrowers and lenders in the same document. He stated:
Lenders need to be able to make a difference between what the asset is worth and the amount they loan. Because if someone defaults on a loan, the lender needs to have the ability to sell the asset for less than the market value. The price could also be affected by any fluctuations in demand. So that’s why they need such a big buffer between the loan value and the value of the actual asset.
Young explained that 20% of the NFTfi platform’s borrowing is defaulted upon, but these loans are mostly lower-value. The NFTfi founder explains that this is due to high-value NFTs being scarce and very limited. Therefore, they will finance loans in the hope that the borrower defaults and will surrender the NFTs.
NFTfi has the top NFT loans. These include Art Blocks (Bored Ape Yacht Club), Cryptopunks (Autoglyphs), Meebits (Meebits) and Vee Friends.
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