NFT-Fi, the Connection Between NFTs and DeFi

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NFT-Fi, the Connection Between NFTs and DeFi

NFTs and DeFi are starting to work together. More and more Dapps in the DeFi space have started to use NFTs in their products. For example, RWA tokenizes real-world assets.

These tokens are NFTs. But we see more use cases for NFTs in the DeFi space. So, that’s why we are taking a closer look at NFT-Fi.

What Is NFT-Fi?

NFT-Fi stands for NFT Finance or Financialization. In other words, you use NFTs to increase markets, financial institutions, etc., in size and influence. Besides this, DeFi offers another interesting feature. It can explore areas that TradFi doesn’t cover. That, right there, is where it becomes fascinating.

So, rather than replacing TradFi, DeFi can also complement it. Where TradFi is mostly centralized, DeFi offers a decentralized alternative. Throw NFTs into this equation, and we have NFT-Fi. As a result, instead of selling your NFTs, you can now, for example:

  • Borrow or lend them.
  • Fractionalize your NFTs.
  • Rent them out.

Three key benefits of NFT-Fi are:

  • Increased liquidity – with new use cases for NFTs, you increase their liquidity.
  • Expanded financial utility – you can create more sophisticated markets around NFTs.
  • Better risk mitigation. – you can create a wider exposure to entire markets, instead of only one segment.

So, let’s take a closer look at how we can use NFT-Fi tools.

NFT-Fi

Source: Chainlink blog

RWAs or Real-World Assets

RWA projects tokenize real-world assets. There’s a wide variety of RWA projects around. They all target different RWAs. For example,

  • Landx.fi – They offer sustainable yield through regenerative agriculture. 
  • 4k Protocol – Bringing physical assets on-chain.
  • Found.xyz – Tokenizing bankruptcy claims which can unlock DeFi loans.
  • Roofstock onChain – Buy and sell real estate on-chain.

RWAs can open up a multibillion-dollar market. Currently, RWAs are one of the hottest crypto spaces, ready to take off.

NFT-Fi

Source: Twitter/X

Lending Aggregators

Unlock NFT liquidity by lending them. Aggregators combine a variety of NFT marketplaces. This allows you to manage and compare offers. They open up new options. Projects active in this market segment, are, for example,

NFT Rentals

Rent out your NFTs and join the sharing economy. Renting allows you to earn with an extra revenue model. Borrowing gives you the opportunity to have temporary funds. Active in this space are, for instance:

Liquidity Scaling

With these projects, you can earn real yield from automated NFT-backed lending strategies. Real yield is an up-and-coming yield-earning metric. So, you need to focus here on ‘real’. In other words, yield is not based on manipulation or unsustainable token emissions. Active in this field are, among others,

Valuations

Enhance your collector cravings with data-driven knowledge. Find machine-driven NFT pricing or in-depth insights into NFT markets. Explore the lesser traveled road in DeFi options. Here are some players, active in this market segment. For example,

NFT Marketplaces

NFT marketplaces allow you to buy, sell and trade NFTs effortlessly. All chains that offer NFTs have also their own NFT marketplace(s). Here are some options, for instance,

Derivatives/Options

Manage or hedge your NFT risks with derivatives, perpetuals, or options. So, did you know that there are NFT DEXs or option protocols? For instance,

However, be careful when using leverage. It offers great gains, but your losses can also be extensive.

Fractional Liquidity

Fractional NFTs are an excellent option for sharing your exposure and reducing risks. You can democratize NFT ownership and liquidity. Fractionalize your NFT and increase its liquidity. Or how about on-chain index tokens, like ETFs? Active in this field, are among others,

Conclusion

NFT-Fi is an exciting space. It combines NFTs with DeFi. Tokenization is key and it represents many fields. From RWA via NFT marketplaces to NFT rentals or fractionalizing your NFTs and more. Tokenization of real-world assets can bring a multi-billion market into this playing field. Diversify your NFT options. So you can get better liquidity options with a wide variety of solutions.

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Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.

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