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DeFi 
+ NFT 
NFT market will disrupt DeFi. Many people are unsure how it will happen. So let's explore
+ NFT NFT market will disrupt DeFi. Many people are unsure how it will happen. So let's explore
NFTs (Non Fungible Tokens) are special tokens that comes unique properties associated with it. Unlike ERC-20 tokens like DAI, YFI, etc..., they are non-fungible in nature (duh)
Which means NFTs have individual characteristics that set them apart
Which means NFTs have individual characteristics that set them apart
Many items can be tokenized by NFTs. We have seen many examples in Digital Art, Games, Insurance, Domain Names (ENS), etc...
The cool thing about this is that they are transferable & they represent ownership to an item. All backed by cryptography
The cool thing about this is that they are transferable & they represent ownership to an item. All backed by cryptography
1) Digital Arts & Collectibles
Now you can buy various art objects from various platforms like @rariblecom, @opensea, etc...
Interesting thing here to note is that you can easily avoid counterfeits
Artists like @muratpak has sold $350K+ worth of art
Now you can buy various art objects from various platforms like @rariblecom, @opensea, etc...
Interesting thing here to note is that you can easily avoid counterfeits
Artists like @muratpak has sold $350K+ worth of art
2) Games
In games, you can tokenize the game objects. And you can trade them with other players
@decentraland has tokenized Lands, Wearables & Names
@AxieInfinity Axies
In games, you can tokenize the game objects. And you can trade them with other players
@decentraland has tokenized Lands, Wearables & Names
@AxieInfinity Axies
3) Insurance
By giving tokens configurable properties, you can make custom contracts required for each situation. This is how @iearnfinance does yNFT tokens
By giving tokens configurable properties, you can make custom contracts required for each situation. This is how @iearnfinance does yNFT tokens
4) Domain Names + Trademarks
Well we have @ensdomains, they are in fact NFTs. Transferable and Customizable. Similar to this, we can tokenize real world trademarks
Well we have @ensdomains, they are in fact NFTs. Transferable and Customizable. Similar to this, we can tokenize real world trademarks
5) Options, Futures Contracts
We haven't seen any options & futures contracts in NFT formats. We only have fungible ERC-20 tokens. Much like insurance, they'll come. Tokenized flexible options & futures contracts.
We haven't seen any options & futures contracts in NFT formats. We only have fungible ERC-20 tokens. Much like insurance, they'll come. Tokenized flexible options & futures contracts.
So far we have seen what NFTs can do. Let's get into the DeFi + NFT part.
NFTs have inherent value because what it represents (ownership to an item) & there's a buyer-seller market.
But they are unproductive assets, all you can do is hold them.
NFTs have inherent value because what it represents (ownership to an item) & there's a buyer-seller market.
But they are unproductive assets, all you can do is hold them.
Real trick happens when you turn unproductive assets into productive assets 
Imagine you lock up your precious NFTs (be it may paintings, cards, insurance, cryptokitties, etc...) in a vault and get a credit line assigned to it
Imagine you lock up your precious NFTs (be it may paintings, cards, insurance, cryptokitties, etc...) in a vault and get a credit line assigned to it
So you just turned unproductive assets into liquid & productive asset by borrowing against NFTs.
But how do you determine the value of NFTs to assign a credit line for it?
This will be a huge market
But how do you determine the value of NFTs to assign a credit line for it?
This will be a huge market
This is like an oracle for NFTs. Existing marketplaces like @rariblecom, @SuperRare_co, etc... has a huge advantage on making this product.
This external oracle product will determine the intrinsic value of the NFTs
This external oracle product will determine the intrinsic value of the NFTs
There are a lot of factors go into determining the value.
First you need to figure what type of NFT is it.
If it is art, it would depend on the artist, number copies, etc..
If it is insurance, depends on the cover, premium, expiry, etc...
First you need to figure what type of NFT is it.
If it is art, it would depend on the artist, number copies, etc..
If it is insurance, depends on the cover, premium, expiry, etc...
So, you lock up multiple NFTs in a vault
Lending platforms will assign a credit line to the vault
You borrow liquid assets from the platform's lending pool
I can't wait to borrow money by locking up tokenized waifus, axies & ens domains
Lending platforms will assign a credit line to the vault
You borrow liquid assets from the platform's lending pool
I can't wait to borrow money by locking up tokenized waifus, axies & ens domains
@MakerDAO is looking into bring real world assets into the platform. I won't surprised if it is in the form of NFTs
Existing lending platforms like @AaveAave & @compoundfinance can easily build a platform like this
But there's a lot of risk too
Existing lending platforms like @AaveAave & @compoundfinance can easily build a platform like this
But there's a lot of risk too
The platforms need to assess what the underlying asset is it and risk associated with it to determine the credit line.
Lots of bottlenecks, but I'm excited about what it brings to the ecosystem.
Lots of bottlenecks, but I'm excited about what it brings to the ecosystem.
Other area I'm excited about is NFTs backed by DeFi products.
@aavegotchi is experimenting in this field, and it's super interesting
Many more products like Aavegotchi will come into the ecosystem
@aavegotchi is experimenting in this field, and it's super interesting
Many more products like Aavegotchi will come into the ecosystem
Soon we will see NFT powered DeFi and DeFi powered NFTs.
The ecosystem is super young, and the way forward includes lots of experimentation
Overall I'm very excited about what is about to come
Thanks for reading
The ecosystem is super young, and the way forward includes lots of experimentation
Overall I'm very excited about what is about to come
Thanks for reading
