Binance crypto exchange has launched a new non-fungible token (NFT) loan feature. The feature allows users to borrow Ethereum (ETH) against their NFTs without the need to sell them.
The loan feature is available to users who hold NFTs from select high-profile collections, including Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Azuki, and Doodles. The amount of ETH that users can borrow depends on the floor price of their NFTs.
The loan feature is designed to make it easy for users to access liquidity without selling their NFTs. This could be useful for users who need to raise funds quickly, or who want to use their NFTs as collateral for other investments.
The loan feature is also a sign of the growing maturity of the NFT market. As NFTs become more popular, it is likely that we will see more financial products and services that allow users to use their NFTs as collateral.
How does the Binance NFT loan feature work?
The Binance NFT loan feature uses a “Peer to Pool” mechanism. This means that users who want to borrow ETH can post their NFTs as collateral, and users who want to lend ETH can choose which NFTs they want to lend to.
The amount of ETH that users can borrow depends on the floor price of their NFTs. The floor price is the lowest price that an NFT has been sold for in the past 30 days.
For example, if the floor price of a BAYC NFT is 100 ETH, then a user who posts a BAYC NFT as collateral can borrow up to 100 ETH.