Arcade Launches Lending Platform Allowing Users to Access Loans Using NFTs as Collateral

DeFi lending platform, Arcade, has officially launched today, allowing borrowers to access loans collateralized by their NFT.
Image source: Arcade

Quick take:

  • Arcade is built on Pawn Protocol, an infrastructure layer for NFT liquidity.
  • Users can access fixed-rate term loans collateralized by their Ethereum-based NFTs.
  • Arcade has more than $15 million locked up in blue-chip NFTs.

DeFi lending platform and peer-to-peer marketplace, Arcade, just went live today. Built on Pawn Protocol, an infrastructure layer for NFT liquidity, the platform provides liquidity to non-fungible assets.

Pawn Protocol facilitates trustless off-chain order matching using structured digital signatures to validate loan terms from borrowers and lenders. Loans are settled on-chain and held in decentralized escrow using Ethereum’s cryptographic security. 

This launch comes a month after Arcade closed a $15 million series A funding round in December, led by Pantera Capital. other investors included Castle Island Ventures, Franklin Templeton, BlockFi CEO Zac Prince and Quantstamp CEO Richard Ma.

Prior to public launch, the platform was only open to a small number of high net worth NFT owners, institutions and DAO. 

Now available to the public, Arcade connects NFT owners who are interested in taking loans to lenders who can provide fixed-rate term loans collateralized by the borrowers’ NFTs on the Ethereum blockchain and earn interest by lending. 

“Our team has been working non-stop to ensure Arcade is the most intuitive and useful platform of its kind, so we are beyond excited to announce its full, public launch. Arcade is a multi-product NFT platform and DeFi primitive that allows users to turn idle NFT assets into usable liquidity,” shared Gabe Frank, CEO and co-founder of Arcade. “Arcade’s continued focus is on building primitives, infrastructure, and applications enabling the growth of NFTs as an asset class.”

Most of Arcade’s value is locked up in the top 1% of NFTs. During its private release phase, the platform held $15 million in blue-chip NFTs locked in escrow and had approximately $6 million of loan volume. Lower value asset loans could be possible after Arcade integrates layer 2 blockchains in the future.

The inspiration for Arcade came from Frank’s pawn lending background as his family owned a chain of pawn stores in Texas. Tying this model to NFTs, Frank felt that a credit market for this new asset class should form. 

Frank believed that just like traditional art, NFTs can be collateralized at some point. He came up with Pawn Protocol, where the asset is held in escrow and used as collateral for loans. If the debt doesn’t get paid, the lender keeps the asset.

Alongside the launch, Arcade is also coordinating the largest on-chain NFT-backed loan to date: a $1.25M art basket loan funded by digital asset trading platform Genesis. The loan is for well-known art collector Chris Ciobanica (AKA Silver Surfer) who has amassed over $10 million worth of NFTs.

Arcade supports a variety of NFT collections and blockchain game digital assets including CryptoKitties, CryptoPunks, Bored Ape Yacht Club, Axie Infinity and more.

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