Quick Take:
- Crypto exchange platform is introducing a lending product on its new NFT marketplace.
- The NFT-back loans feature will be available from 2022 when the platform launches.
- Kraken follows the crypto lending platform, Nexo’s recently announced NFT-lending feature.
Crypto exchange platform Kraken has announced plans to launch NFT-backed loans next year. The company recently revealed its plans to expand into the non-fungible token market by launching an NFT marketplace. According to Kraken co-founder and CEO Jesse Powell, the platform will also offer users an opportunity to borrow using NFTs as collateral.
In an interview with Bloomberg News, Powell said the company plans to add the feature early next year, enabling it to determine the liquidation value of an NFT, thus deciding whether it can be used as collateral for a loan.
The platform will be able to reflect the value of deposited NFTs in the user’s accounts, thus enabling them to borrow funds against it.
The challenge could be finding a uniform valuation framework for NFTs, given the varying pricing on collectibles. However, with NFTs expected to gain more interest next year, Powell expects NFT utility to explode, providing more data to create a reliable valuation metric.
“Phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs,” he said.
Kraken’s plans to allow investors to make more from their digital investments stretches beyond the NFT lending platform. The company recently acquired Staked, a platform that will enable users to earn yields and crypto rewards through non-custodial crypto staking.
According to CoinMarketCap, Kraken has grown since launching in 2011 to become one of the top-ranking crypto exchange platforms in terms of average liquidity, volume and digital asset reserves.
In the last 24 hours, Kraken ranked fourth on CoinMarketCap’s spot exchange with a trading volume of $1.4 billion, behind FTX and Coinbase, which had $2.4 billion and $5.4 billion, respectively, and the market leader Binance with $22.5 billion.
Kraken’s new product launch comes hot on the heels of the crypto lending platform, Nexo’s announcement of an NFT-backed feature, allowing users to borrow against their digital art collections.
Arcade Network, a popular DeFi and NFT gaming platform also recently secured $15 million in a funding round, in an effort to beef up its collateralized NFT marketplace, allowing users to use non-fungible tokens as collateral for loans.
The entire NFT ecosystem is becoming a crucial part of blockchain gaming and cryptocurrency loans, which Kraken CEO thinks will help scale up the application of NFTs in the crypto space.
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