# Loan2Mint (L2M) System

By [Alex](https://paragraph.com/@minerxbt-2) · 2024-08-14

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In many cases, Collateralized Debt Protocols (CDPs) issue NFTs to track positions in the loan. When the loan is fully repaid, the NFT is burned/ unissued. This system has room to be innovated with.

We can incorporate 1-of-1 or edition-based NFTS to be minted as the initial erc1155, then reissued for full ownership when the loan is closed as an erc721. This works because the erc1155 is burned when the loan is closed. The new NFT becomes a commemorative loan NFT that now becomes another potential asset if the art is deemed valuable.

![](https://storage.googleapis.com/papyrus_images/616dffe9d32840dcc70b0e33d75e08c6b0be11803a28ace833382b9351fc095d.png)

Why? Because we fucking can.

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*Originally published on [Alex](https://paragraph.com/@minerxbt-2/loan2mint-l2m-system)*