The untapped part in the NFT market
Although NFTs are still in a bear market, it doesn't affect our fundamental assessment that the Web3 industry will continue to progress.
There are already some NFT lending protocols in the market, but after a deep analysis of their business models, we found that the current NFT lending protocols have the following problems:
Low capital utilization rate: Generally between 30%-50%
Single supportable asset subject: Generally only supports blue-chip assets
Low asset utilization rate for lenders: The point-to-pool interest rate is limited, and the funds cannot be fully utilized during the point-to-point order matching period
Inability to use credit across protocols: The credit of most protocols is confined within their own platforms and does not extend to other corners of the crypto world, which makes the composability of the protocol very poor
Therefore, we hope to build the Shadow protocol to solve these problems and create a non-audited, non-custodial, decentralized, and more reasonable asset utilization rate in the free interest rate market.
Why did we build the Shadow protocol
Shadow protocol is committed to building a protocol that uses NFT as collateral and creates credit for users. It corresponds to risks through different credit limits of different assets and enhances users' asset utilization rate through the integrated development of point-to-point and point-to-pool.
The features of the Shadow protocol can be summarized as follows:
Higher capital utilization efficiency: On bendDAO, you can add funds to the lending pool and earn interest. On blur, you can earn interest in a point-to-point manner. In Shadow, you can both earn interest in the lending pool and find more suitable point-to-point lending that meets your expectations to increase returns.
Better lending model: In Shadow, if you need long-term capital use, you can use NP for lending at a lower interest rate (usually less than 10% APY); when you need more liquidity, you can use AP with a higher loan-to-deposit ratio and a higher interest rate (usually less than 15% APY).
Diversified loan services: You can use different lending pools with different TVLs for lending, meeting different loan needs on an immediate basis; you can also find personalized lending schemes that meet your expectations in P2P lending, for zero-interest loans and high-interest loans with very high TVL.
BNPL & Credit Purchase: Through the Chrome plugin, you can use your credit in Shadow Protocol to purchase NFTs in the trading places you are most familiar with, such as OpenSea and Blur. When credit is insufficient, you can try to pledge immediately after purchase (within one block) to atomically increase your credit.
Permissionless and Composable: Anyone can establish their own lending pool on Shadow and add liquidity so that others can lend in the pool, greatly increasing the composability of the protocol. For example, PFP project parties can build their own lending pools to market their projects; GameFi NFT can integrate credit purchases into their games to improve the utilization rate of assets in the game; RWA can adjust TVL and HF according to the situation of the assets, thereby creating a lending pool that meets its real risk.
Governance and income: Governance rights are distributed through VEToken, income is accelerated through staking, and liquidity is guided through bribery.
Why build the protocol now?
We believe that NFT, as a non-standard asset in the crypto world, whether it's PFP, GameFi, or RWA, will undoubtedly continue to play a crucial role in crypto. The mode of lending through collateralized loans has been proven to be the most effective way to solve the liquidity and utilization rate of non-standard assets in human past practices. Therefore, Shadow hopes to deeply cultivate the lending market of non-standard assets and realize its business model from it.
There is no doubt that the NFT market started with PFP. The current deep bear market in the PFP market allows us to observe the transaction data all the way from the bull market more clearly, thereby building a lending model that is more practical than our predecessors. At the same time, the Shadow team also pays attention to the future direction of the NFT market. We believe that NFTs similar to ERC1155 will play an important role in GameFi-type assets, while ERC721-type assets will play a crucial role in indivisible RWA-type assets such as bonds and real estate. The Shadow team believes that now is the best time to summarize the past market and look forward to the possibilities of the future market. It is the best time to build an NFTfi protocol for the next crypto cycle.
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