Quick take:
- The round was led by Variant and Fintech Collective.
- NiftyApes aims to drive value to the borrower by making lenders compete to provide the best terms throughout the loan period.
- Borrowers lock their NFT into NiftyApes to accept any loan offer they choose.
NiftyApes, a lending protocol that enables loans on any NFT or collection, today announced that it has raised $4.2 million in a seed round led by Variant and Fintech Collective.
Other investors include Robot Ventures, Polygon, Coinbase Ventures, The LAO, FlamingoDAO, Ryan Sean Adams, David Hoffman, Eric Conner, Anthony Sassano, Cyrus Younessi, DC Investor, James Young, James Duncan, Nadav Hollander, Brendan Forster, and the founders of SuperRare and Rarible.
Funds will be used to grow its team of seven and continue expanding as the company is actively hiring.
NiftyApes provides an active lending auction for every theoretical asset or collection in existence. As traditional debt markets prioritise returns for capital holders while forgoing returns to the lender and borrower exposure to better terms, NiftyApe instead applies that method to lenders instead of borrowers by facilitating a continuous auction for the right to the interest earned on each loan.
When a loan offer is executed, Lenders don’t own the loan but own the rights to the interest payments and collateral in the event of a loan default. They have interest and default rights as long as they offer the best terms for the Borrower.
Always-on auctions drive value to the borrower by ensuring lenders compete to provide the best terms to the borrower throughout the entire loan duration. Borrowers can refinance to any loan offer they choose, as many times as they like.
For instance, If the lender sets the terms of the loan below market, other lenders will refinance the loan at better terms. Set the terms too high above market, and the lender might lose money by over-valuing the asset. As the value in the loan-to-value ratio (LTV) increases, lenders compete to offer better terms to have the right to interest payments and exposure to the underlying collateral.
Lenders deposit capital to earn yield and make offers on any asset or NFT collection in existence, and successful offers receive interest and default rights for assets while borrowers lock their NFTs into NiftyApes for instant liquidity.
Another NFT-backed lending platform, MetaStreet, recently raised $10 million to fund its product development. DeFi lending platform and peer-to-peer marketplace, Arcade, went live in April, allowing users to take loans using NFTs as collateral.
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