Many crypto service providers have accelerated efforts to expand their offerings and revenue streams and increase their user base.
According to an announcement, the largest crypto exchange by trading volume, Binance, has added a non-fungible token (NFT) loan feature to its services.
The cryptocurrency exchange will allow borrowers to use their NFT as collateral to borrow cryptocurrency without needing to sell assets.
This development could be part of Binance’s expansion plans.
NFT Collateralized Cryptocurrency Borrowing With Zero Gas Fees
Binance’s newly launched NFT loan product aims to provide a more accessible solution for NFT holders, allowing them to borrow at competitive interest rates and zero gas fees.
In addition, it enables users to borrow Ether without selling their assets.
Initially, the product will be available for holders of profile NFT collections such as Bored Ape Yacht Club (BAYC), Azuki, Mutant Ape Yacht Club (MAYC), and Doodles.
According to Binance, this innovative feature would introduce the benefits of Decentralized Finance to the Binance NFT community.
The exchange also mentioned it would include support for more NFT collections soon.
Furthermore, Binance said it designed this product for users who need quick access to funds but are not ready to sell their prized NFTs.
The feature utilizes a Peer-to-Pool approach where Binance NFT acts as the loan pool, ensuring a fast and secure experience.
The amount of ETH users can borrow would depend on the NFT collection’s floor price, which Ninance would calculate using Oracle Pricing.
The Oracle Pricing would use data from various sources, including Oracle service provider Chainlink and NFT marketplace OpenSea.
Risks Associated With NFT Loans
At press time, the Binance NFT marketplace has over 90 million users globally and offers many valuable collectibles.
Since Binance launched its NFT platform in June 2021, the exchange has steadily expanded its features.
In March, Binance unveiled the Beta version of an AI-based NFT image generator called “Bicasso.”
Although Binance has a vast experience and user base in NFT staking and other DeFi-related offerings, it acknowledged the risks associated with NFT loans.
The NFT market is highly volatile and may lead to potential losses when asset values decline.
Hence, the exchange advised users to assess the risks involved with this new service.
Meanwhile, the NFT market cap has continued to grow as it sits at $3,500,191,542.48 at press time.
The market’s sales volume has also reached $32, 631,070.55 but shows a decline of 7.84% in 24 hours.
NFTs total sales stand at 59,060, down by 19.98% in 24 hours, with MutantApeYachtClub still leading the pack in all metrics except the 24-hour sale volume.