Blue-chip NFT owners explore alternative uses as sales dip – TechCrunch
The NFT market is a sector of the crypto ecosystem that has grown exponentially over the past year. But as sales have waned in recent months, blue-chip NFT holders are looking for other upside opportunities.
NFT’s global sales volume reached $4.6 billion in January, but fell nearly 50% to $2.4 billion at the end of March, according to data from data aggregator NFT CryptoSlam.
According to the founder of Burnt Finance, who goes by the name Burnt Banksy, weak projects with loosely connected communities may be partly responsible for the decline in overall NFT sales.
Although total NFT sales are down, top NFT projects like Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), and Azuki have grown 169%, 199.6%, and around 146% in past 30 days, respectively. , data from CryptoSlam showed.
While a number of NFT owners sell their digital items, others have “strong beliefs” in their NFTs and want to keep them, Banksy said. So there has been an increase in NFT loans because owners want to use them as assets to earn cash and in turn generate additional return elsewhere or buy more assets, he added.
NFT lending volume in decentralized NFT lending marketplaces Arcade and NFTfi increased 171% from $30.63 million in Q4 2021 to $83.17 million in Q1 2022, according to data from gideontay , Dune Analytics user.
“The majority of the lending market is focused on established, high-value NFT collections,” Stephen Young, CEO of NFTfi, told TechCrunch. “While overall NFT sales may be down, top-tier projects still retain considerable value.”
As with any other asset, people lend their NFTs to obtain liquidity and maximize the efficiency of their own capital, Marco Manoppo, research director at Digital Asset Research, told TechCrunch.
“This can be done either through notable crypto brokers such as Genesis or through decentralized apps that attempt to facilitate NFT lending through smart contracts, adhering to a certain set of parameters to manage liquidation risk,” a- he declared.
Arcade specializes in providing NFT owners with the ability to get a loan by putting their digital collectibles as collateral, instead of having to provide another asset like a house or car. The company’s platform has approximately $17 million in loan volumes and more than $25 million in prime NFTs locked in escrow, said Gabe Frank, CEO and co-founder of Arcade.
“If there’s a slowdown in primary sales for NFTs and lending picks up, it’s because there’s more awareness and education about what people can do with their NFTs,” said Frank.