The world’s largest crypto exchange by trading volume, Binance, has launched a new non-fungible token (NFT) loan feature. The platform will offer zero gas fees and the ability to borrow Ethereum (ETH) without the need to sell assets.
The loan feature aims to cater to those who want quick access to funds but don’t want to part with their NFTs. It uses what Binance calls a “Peer to Pool” mechanism with Binance NFT acting as a loan pool, and the amount of ETH that users can borrow depends on the floor price of their NFTs.
Data for the system comes from multiple sources, including Oracle service Chainlink (LINK) and NFT marketplace OpenSea.
At the time of writing, Binance’s NFT Loan feature supports just four well-known collections, but more are expected to roll out soon.
“Initially available with select high-profile NFT projects such as Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Azuki, and Doodles, the innovative feature introduces the benefits of decentralized finance (DeFi) to the Binance NFT community. More collections are expected to be added in the near future,” Binance said in a statement.
Binance launched its NFT platform in June of 2021 and has steadily been adding features ever since. In March, the crypto exchange launched a beta version of an artificial intelligence-based NFT image generator called “Bicasso.”
The launch of Binance’s NFT loan feature is a sign of the growing maturity of the NFT market. As NFTs become more popular, there is a growing demand for ways to access liquidity without selling assets. Binance’s NFT loan feature provides a convenient and secure way for users to do just that.
How does Binance’s NFT loan feature work?
Binance’s NFT loan feature is a peer-to-pool mechanism. This means that users who want to borrow ETH can post their NFTs as collateral in a pool. Other users who want to lend ETH can then borrow from the pool, using the NFTs as collateral.
The amount of ETH that users can borrow depends on the floor price of their NFTs. The floor price is the lowest price that an NFT has been sold for in the past 30 days. For example, if the floor price for a Bored Ape Yacht Club NFT is 100 ETH, then a user can borrow up to 100 ETH by posting their NFT as collateral.
What are the benefits of Binance’s NFT loan feature?
There are a number of benefits to using Binance’s NFT loan feature. First, it allows users to access liquidity without selling their NFTs. This can be helpful for users who need quick access to funds but don’t want to give up their NFTs.
Second, Binance’s NFT loan feature is completely decentralized. This means that there is no central authority that can control or censor the loans. This makes it a more secure and reliable option than traditional lending platforms.
Third, Binance’s NFT loan feature is very easy to use. Users can simply post their NFTs as collateral and then borrow the amount of ETH that they need. The entire process can be completed in minutes.