Skillet is the one-stop-shop for NFT liquidity. Sell your NFTs for the top price. Borrow at the best rates. Manage your portfolio with ease.
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Skillet is the one-stop-shop for NFT liquidity. Sell your NFTs for the top price. Borrow at the best rates. Manage your portfolio with ease.
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Yes, I said NFT lending. Just hear me out, please.
NFT lending is a trustless system that connects lenders and borrowers through smart contracts. NFT holders can gain access to capital by borrowing money using their NFTs as collateral. Lenders, meanwhile, can a) earn passive interest, or b) receive the underlying collateral if the loan isn’t paid back in full.
When an NFT holder borrows money using their NFT as collateral, the NFT itself is locked up in a 3rd party escrow wallet. If loan is paid back, the NFT is automatically transferred back to the borrower. If the borrower does not repay in full, the loan is default and the NFT is automatically transferred to the lender. Often, in this case, the lender is able to receive the underlying asset at a discount.
With NFTs, parties from all over the world — whether they be people or institutions — are able to transact with one another. The blockchain democratizes finance so that anybody with funds in their wallet can submit bids or loan offers on any item they deem to be of value. It’s like eBay but smarter.
I recently watched a documentary on Netflix called King of Collectibles: The Golden Touch. Owners of expensive sports memorabilia often find themselves (relatively) cash poor — they do not have ample cash on hand because their net worth is parked in expensive collectibles.
Imagine you own a signed Leo Messi jersey valued at $1m. You don’t quite want to sell this jersey — maybe you’re emotionally tied to it, or maybe you want to hold onto it as an investment. But you find yourself in a pickle, because you need money to put a downpayment on a house.
You post your jersey on an NFT marketplace to receive loan offers. You get an alert that somebody across the world is willing to offer you $100,000 at 10% interest to be paid in one year. You accept the terms, and you give the jersey to Goldin to custody the item through the Collectors’ Vault. An NFT which represents ownership of the jersey is stored in escrow via a smart contract.
The 2 Scenarios:
You pay back the loan (plus interest) at the end of the year. Poof! Everybody is happy. You were able to put a downpayment on your house using $100,000 you didn’t have before, and you still kept your jersey. The lender, meanwhile, made $10,000 in passive interest without having to get up from the couch.
You don’t pay back the loan. Womp womp. The NFT, acting as the receipt to the jersey, is automatically transferred to the lender, who burns the NFT to redeem the jersey from the vault. They just got a jersey valued at $1m for the low price of $100,000.
Realistically, we are a ways away from that real life use case… but not as far as you’d think. NFT lending recently hit $1bn in total volume over the past 2 years. And that’s in spite of the underlying assets — being silly JPEGs — depreciating in value over time. Even as the NFT craze has died down from the peak hype (a massive understatement), NFT-based lending has managed to surpass $750m in 2023 alone.
We can consider the current state of NFTs as the guinea pigs to pave the way for real world assets to be tokenized on the blockchain. Hopefully, as the ecosystem continues to grow, we can apply the concepts of the NFT market today to real life items like deeds to houses, car registrations, event tickets, stocks, gold, etc.
Until then, let’s be grateful that cartoon monkeys are the test subjects to perfect these tools. Here’s to onboarding the next billion users into Web3.
Yes, I said NFT lending. Just hear me out, please.
NFT lending is a trustless system that connects lenders and borrowers through smart contracts. NFT holders can gain access to capital by borrowing money using their NFTs as collateral. Lenders, meanwhile, can a) earn passive interest, or b) receive the underlying collateral if the loan isn’t paid back in full.
When an NFT holder borrows money using their NFT as collateral, the NFT itself is locked up in a 3rd party escrow wallet. If loan is paid back, the NFT is automatically transferred back to the borrower. If the borrower does not repay in full, the loan is default and the NFT is automatically transferred to the lender. Often, in this case, the lender is able to receive the underlying asset at a discount.
With NFTs, parties from all over the world — whether they be people or institutions — are able to transact with one another. The blockchain democratizes finance so that anybody with funds in their wallet can submit bids or loan offers on any item they deem to be of value. It’s like eBay but smarter.
I recently watched a documentary on Netflix called King of Collectibles: The Golden Touch. Owners of expensive sports memorabilia often find themselves (relatively) cash poor — they do not have ample cash on hand because their net worth is parked in expensive collectibles.
Imagine you own a signed Leo Messi jersey valued at $1m. You don’t quite want to sell this jersey — maybe you’re emotionally tied to it, or maybe you want to hold onto it as an investment. But you find yourself in a pickle, because you need money to put a downpayment on a house.
You post your jersey on an NFT marketplace to receive loan offers. You get an alert that somebody across the world is willing to offer you $100,000 at 10% interest to be paid in one year. You accept the terms, and you give the jersey to Goldin to custody the item through the Collectors’ Vault. An NFT which represents ownership of the jersey is stored in escrow via a smart contract.
The 2 Scenarios:
You pay back the loan (plus interest) at the end of the year. Poof! Everybody is happy. You were able to put a downpayment on your house using $100,000 you didn’t have before, and you still kept your jersey. The lender, meanwhile, made $10,000 in passive interest without having to get up from the couch.
You don’t pay back the loan. Womp womp. The NFT, acting as the receipt to the jersey, is automatically transferred to the lender, who burns the NFT to redeem the jersey from the vault. They just got a jersey valued at $1m for the low price of $100,000.
Realistically, we are a ways away from that real life use case… but not as far as you’d think. NFT lending recently hit $1bn in total volume over the past 2 years. And that’s in spite of the underlying assets — being silly JPEGs — depreciating in value over time. Even as the NFT craze has died down from the peak hype (a massive understatement), NFT-based lending has managed to surpass $750m in 2023 alone.
We can consider the current state of NFTs as the guinea pigs to pave the way for real world assets to be tokenized on the blockchain. Hopefully, as the ecosystem continues to grow, we can apply the concepts of the NFT market today to real life items like deeds to houses, car registrations, event tickets, stocks, gold, etc.
Until then, let’s be grateful that cartoon monkeys are the test subjects to perfect these tools. Here’s to onboarding the next billion users into Web3.
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