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The road to financialization of NFT



NFT is the token form of virtual goods, including digital art, virtual real estate, game assets, etc. NFT can also be used in real-life commodity distribution mechanisms, such as inventory management, trade financing, ticketing and other fields.

How to make your NFT more valuable?

In the senior encryption world group, assets that can generate income are often more valued by people, so what kind of chemical reaction will NFT have when it meets DeFi?

Enhance the liquidity of NFT

NFT assets can share ownership

NFT can generate income

NFT can be used as collateral

Image credit: Fractional

Liquidity of NFT

Collectibles have always had the problem of poor liquidity. But with the tokenization of collectibles, rare assets have a greater possibility of generating liquidity. The current NFT asset segmentation platform (NFT Fragmentation) can convert ERC721 or ERC1155 into tradable homogeneous ERC20 tokens. This innovation brings unprecedented liquidity to NFT and other collectibles.

Samsung Next, an investment company of Samsung Electronics, invested in the NFT game Genopets: On July 8, Samsung Next, an investment subsidiary of Samsung Electronics, announced that it has invested in the NFT game Genopets through the Simple Future Token Agreement (SAFT), but the specific investment amount has not yet been announced. disclosure.

Genopets completed $8.3 million in financing in October last year, led by Konvoy Ventures and Pantera Capital, with participation from Animoca Brands, Solana Capital, and Alameda Research. (The Guru)[2022/7/8 1:59:58]

The high-value NFT asset split started with the Metapurse Fund, buyers of the Beeple's Everydays 5000 ($69.3 million worth of NFTs). The Metapurse Fund divided the works, created B20 tokens, and sold them in two phases.

The market value of the NFT series VeeFriends created by the well-known investor Gary Vaynerchuk has exceeded 100 million US dollars: Jinse Finance reported that according to the latest data, the market value of the NFT series VeeFriends created by the well-known investor Gary Vaynerchuk has exceeded 100 million US dollars. The total amount is 139.19 million US dollars, and the current floor price is 14.2 ETH, down 4.44% in 24 hours. Gary Vaynerchuk is an investor in well-known technology companies such as Uber, Facebook, Twitter, and Tumblr. He holds the "VeeCon" conference every year. VeeFriends NFT holders can obtain exclusive access to VeeCon events within three years after purchase, and part of the NFT sales funds will also be distributed Will donate to charity. [2022/3/12 13:53:05]

Coinmarketcap: B20 Tokens

The benefit of splitting NFTs into fungible tokens is that it provides a good valuation mechanism for most NFTs as the market corrects token prices. Platforms like Fractional, NFT 20, and Unicly all help collectors carve up their NFTs and create communities around them.

Genesis Shards announced a partnership with NFT lending platform Strip Finance: On February 17, the decentralized ecosystem Genesis Shards announced a partnership with NFT lending platform Strip Finance. Strip Finance and Genesis Shards will support each other's ecosystem, Strip Finance will gain access to the Genesis Shards ecosystem and network, and Genesis Shards partners will be able to access the Strip Finance community. [2022/2/17 9:56:27]

The main considerations for collectors include the ability to liquidate NFT after splitting, control the number of coins mined for homogeneous tokens, prevent large-scale buyouts by "whales", and the ability to create a community around NFT. The main consideration for the buyer is to be able to gain exposure to certified NFTs and participate in the governance process.

Some other interesting projects building or expanding in this direction include DODO NFT and DAOfi's Fraction.Art. The figure below shows the liquidity of multiple split tokens and ETH pools on the Unicly platform in less than a week.

Huobi Yan Xin: NFT cross-chain will become a rigid demand after Layer2 goes live: On March 30, in the AMA themed "Layer2+NFT Chemical Reaction", Yan Xin, senior investment manager of Huobi's strategic investment department, said that NFT is more than just Crypto Art, for financial innovations such as asset backed tokens, NFT will also have a lot of application space. In the future, the application of off-chain assets on the chain will be developed. On-chain issuance of artworks, music copyright on-chain, real estate, loans... Many scenarios can be mapped to the chain through NFT

The field he is most looking forward to is the cross-chain NFT bridge. After Layer 2 is gradually launched, Ethereum has entered the era of multi-chain. The just-needed NFT cross-chain. At present, Huobi has made a lot of layouts on Layer 2, and bet on the leading projects zkSync and Optimism in the expansion plan. [2021/3/31 19:34:03]


The Global NFT Alliance jointly initiated by MoonSwap, Conflux and DEGO was officially established: On March 8th, the automatic market-making decentralized trading platform MoonSwap tweeted that the Global NFT Alliance (GNA) was officially established today. GNA is composed of MoonSwap, Conflux and DEGO Co-sponsored. [2021/3/8 18:24:01]

Total lock-up volume (TVL) of high-quality projects on the Unicly and NFT20 platforms

Owning a rare punk is great, but building a punk community and sharing ownership of NFTs (or collectibles) is even more ideal. Unicly, a fork of Uniswap V2, has successfully built communities for some well-known NFT projects such as Hashmasks, Cryptopunks, Autoglyphs, and Doki Doki.

The financialization of NFT has spawned a new type of community, NFT DAOS. The first generation of NFT DAO provides services for managing NFT and artists. Jenny DAO is the next generation NFT DAO, they curate the NFT collection process and focus on the financialization of these assets. Jenny DAO is unique in that uJenny tokens represent the NFT assets it holds and the DAO social tokens.

uJenny is an ERC20 token issued by Jenny DAO on the Unicly platform, representing partial ownership of all NFTs purchased by the DAO. This will be truly the first asset-backed social token. Currently uJenny can be used to mine UNIC tokens on the platform.

Jenny Token (uJenny)

Now, NFTs have also become income-generating assets, especially in the field of games. The concept of blockchain games has become a hot spot in the industry after the explosion of Cryptokitties in 2017-2018, but a large number of projects on this track have long-term monthly activity of tens to hundreds of people. The reason: poor playability and poor performance (Constrained by the performance of the blockchain), some requirements are pseudo-demand (such as the project represented by Dmarket wants to build a game props trading market to open up traditional games), but currently the number of monthly active-zce users of NFT games represented by Axie Infinity has already reached a certain level. We predict that the future development of blockchain games will have its own characteristics rather than simply copying traditional games to the blockchain. Successful projects will definitely have stronger financial attributes. Players will gain benign, Positive economic incentives to form an ecological closed loop.

Axie Infinity

Axie Infinity LP performance (below) shows that, overall, LPs in the Uniswap SLP-ETH pool have generated profits, yielding around 16%.

F1 Delta Time

Delta Time's NFT staking allows users to increase their earnings by earning $REVV tokens. At a token price of $0.5034, Apex NFT stakers will receive $60,000 worth of $REVV tokens per NFT. Stakers of the most common NFTs will receive at least $125 in $REVV tokens.

Splitting NFTs into ERC20s is a natural progression for the NFT community to achieve financialization of their assets and healthy price discovery. NFTX is the first project to create an NFT-based ETF. As new NFT index funds such as MASK and PUNK appear on the platform, NFTX will gain more and more popularity.

At the same time, collectors will quickly realize that NFT index funds in the form of ERC721 are inefficient. Depositing NFTs as collateral in these funds does not guarantee that depositors will receive their original deposit (i.e. the deposited NFT) upon a withdrawal request.

NFT20 launched the NFT20 flash loan based on Aave. The borrower will borrow 20 of the most valuable Hashmasks from the pool, get the accumulated NCT (Name Changing Token rename token), get ETH after selling (NFT20 DAO will charge a 10% fee) and return the borrowed NFT .

The next step of the NFT fragmentation platform is to provide lending services for NFT promoters and ERC20 fragmentation token holders.

In the exciting field of NFT lending, we predict that the next project that can come out is a product that can design an effective pricing mechanism and liquidation mechanism to solve the risk of NFT collateral impairment (because most of the high-value NFT Assets appear in the field of art and special collections, and the asset price bubble is relatively large). In addition to being a path to the on-chain of physical assets that we are familiar with, NFT's special design can naturally and accurately express a large number of complex original on-chain assets. From the current on-chain insurance policies and on-chain virtual game assets, in the future there may be on-chain behavioral logic, NFT assetization of credit information, and even off-chain applications of on-chain NFT assets. After the carnival in the first half of the year in the NFT market, infrastructure builders/art creators and collectors will always insist on exploring the real value behind it.

In short, we have witnessed the popularity of NFT in the first quarter of 2021, not only seeing participants in the encrypted field, but also more and more people in the non-encrypted field. From Beeple's work Everydays 5000 to Twitter founder Jack Dorsey's first tweet NFT, high-value transactions have been involved. Now it seems that individual collectors, NFT funds and DAOs have exquisite NFT collections, and it is time to make them more valuable: such as making them interact with each other (Alethea), dividing their ownership and building around these NFTs The community (Unicly), using them for lending or continuing to collect (Jenny DAO), these are exciting directions.


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