NFT Lending Guide: Peer-to-Peer NFTfi and Peer-to-Pool BendDAO

Few expected this when NFTs dominated the crypto space late last year.

Who would have thought that jpegs of monkeys and pixelpunks could be worth thousands (or millions) of dollars?

Regardless, NFTs are a long way from becoming digital memes. There are billions of dollars of capital in this space right now.

Due to the influx of capital, people in the NFT space are not only interested in collecting NFTs, but also financializing them in different ways.

This is NFT-Fi (combination of NFT and DeFi).

This article will describe how to take your first steps in this emerging ecosystem, starting with NFT lending.

• Goal: Learn to borrow and lend NFTs
• Skills: Intermediate
• Time taken: 1 hour of research
• ROI: XYZ

Welcome to NFTfi

There’s DeFi, there’s NFT, and there’s NFTfi—where the two fields intersect.

In the current NFTfi ecosystem, there are already various categories.

The biggest ones right now are NFT marketplaces and liquidity protocols like OpenSea, LooksRare, Zora, NFTX, and Sudoswap.

However, there are also NFT derivative projects, NFT infrastructure projects, NFT pricing projects, and more. People are exploring the NFT frontier, so each of these areas is growing rapidly, but the largest category of NFTfi out of the market right now is NFT lending protocols.

That said, NFT lending projects come in all shapes and sizes.

Regarding strategies, this article will introduce how to use NFTfi , the largest peer-to-peer NFT lending project, and BendDAO , the largest peer-to-pool NFT lending project.

1) NFTfi

Difficulty: Intermediate

Cost: +💰

NFTfi is a peer-to-peer marketplace offering NFT collateralized loans.

In other words, the project allows borrowers to propose desired NFT loan parameters, and crypto lenders can then choose to accept those terms on a person-to-person basis.

The advantage of this approach is that it allows you to fully customize and choose your NFT loan parameters. The downside, if any, is that it can take a long time to find another party willing to take your loan.

How to take a loan on NFTfi

• Log in to app.nftfi.com/lend/assets and connect your wallet
• Click on the NFT loan offer you are interested in

• Click the "Make Offer" button and choose to accept the terms proposed by the borrower, or customize and apply for your own terms (amount, repayment, schedule, etc.).
• Next click the "Grant" button and use your wallet to approve NFTfi to use your funds (this is a one-time transaction)
• Then secure your loan with your wallet and that's it, your counterparty has seven days to consider your offer before it's due
• For more on how to do it wisely, see 3 Lending Strategies for NFTfi

How to Borrow on NFTfi

• Log in to app.nftfi.com/borrow/assets and connect your wallet
• Use the provided filters to find the NFT in your wallet you want as collateral
• Using the next interface, specify the loan amount you want, the loan period, interest rate, etc.
• Then use the "List as Collateral" button to finalize
• Wait for a lender that accepts your terms

2) BendDAO

Difficulty: Intermediate

Cost: 💰💰💰

BendDAO is a peer-to-pool NFT lending protocol.

In other words, BendDAO depositors provide ETH to liquidity pools to earn interest, and the project’s borrowers can then take instant NFT-backed loans through these pools.

How to Loan on BendDAO

• Enter benddao.xyz , connect your wallet
• Sign transactions to verify your address
• Click on the "Liquidity" option, then click on the "Deposit ETH" button
• Enter the amount of ETH you want to deposit and press the "Deposit" button
• Complete the transaction with your wallet, then sit back and wait for the payoff - current lending rate is 8.5% APR

How to Borrow on BendDAO

• Go to benddao.xyz/liquidity/batch-borrow and connect your wallet
• BendDAO currently accepts deposits from Azuki, BAYC, CloneX, CryptoPunks, Doodles, and MAYC NFTs, if you hold one of these and want to continue borrowing, press the "Deposit" NFT button
• Launch two approval transactions, one for approving debt tokens and the other for approving NFTs
• Enter the amount you want to borrow and press "Borrow ETH"
• Then, you can repay the loan on demand through BendDAO’s borrowing panel

NFTfi is just getting started

When Bitcoin and the first cryptocurrencies came out, you could send them from address A to address B and so on.

It wasn't until the advent of the smart contract platform Ethereum that digital tokens became composable, expressible, and usable in a variety of different ways.

We see a similar trajectory from simple to advanced in NFTs. In the beginning, you can basically just buy and sell NFTs, and while that's just the beginning, it's just the beginning of what's possible.

The rise of DeFi's NFTfi space is beginning to pave the way for a variety of more advanced use cases, such as NFT derivatives, NFT loans, NFT pricing agreements, and more.

Today, NFT lending projects like NFTfi and BendDAO are early pioneers in this space, but in the next few years, I predict we will see more NFT lending protocols emerge, and they will become more and more user-friendly. Familiarity with the field now can pay dividends later.