Buy a boring monkey now and pay later with a new service for Ethereum NFTs

Even at deflated prices in the midst of the ongoing downturn in the crypto market, a Bored Ape Yacht Club NFT will give you around $ 104,000 worth of ETH on the low end. Decentralized lending protocol Teller wants to help make the price tag a little less intimidating: buy a “blue chip” NFT now … and pay it later.

Counter new NFT buy now, pay later (BNPL) feature is like those led by startups like Affirm and Klarna and taken into use by large online stores, albeit with some important differences. It is currently only available for a select number of notable NFT projects, and funds are provided by potential lenders, large and small, offering liquidity through the platform.

The Service, called Ape Now, Pay Later, runs on the Ethereum scaling platform Polygon. Ryan Berkun, founder and CEO of Teller Finance, says the platform helps fill a market need to enable potential buyers to access more expensive NFT assets by paying over time.

“Buying NFTs is one of the core things Web3 consumers want to do right now,” he said. Decrypt. “Buy now, pay later is a simple matter.”

This is how it works. If, for example, a Bored Ape Yacht Club NFT that a user wants is listed on OpenSea marketplace, then they can use Teller’s platform to specify that they want to buy that asset. The user is required to pay a minimum down payment of as much as 50%, depending on the project, and then the platform tries to match the potential borrower to a lender.

If the match is successful and a lender accepts the terms, the advance payment is collected with the rest of the funds from the lender, NFT is purchased from OpenSea, and it is placed in a deposit wallet during the repayment cycle. If all payments are made on time, the borrower will receive the purchased NFT from the escrow wallet.

An NFT is a blockchain token used to prove ownership of an object, and they can be used for things such as artwork, profile pictures, access cards and tickets, and digital collectibles. The NFT market increased to $ 25 billion in trading volume in 2021 alone, and has already reached around $ 20 billion in organic trading so far this year, per. DappRadar.

Supported Ethereum NFT projects at launch include Bored Ape Yacht Club and Mutant Ape Yacht Clubplus Moonbirds, Doodles, Cool cats, Azuki, Meebits, Adidas Originals: Into the Metaverse, RTFKT-MNLTHand Murakami.Flowers Seed.

The adidas NFTs have the lowest down payment requirement of only 25% of the costs in ETH, while RTFKT-MNLTH and Murakami are at 33% each. All other “blue chip” collections require a minimum of 50% down payment.

Berkun said that prices were chosen based on factors such as market liquidity and volatility. The Adidas NFTs, for example, are effectively interchangeable, as they all look the same and offer the same functionality for holders. On the other hand, each Bored Monkey or Doodle image consists of a unique combination of attributes, although many are ultimately similar in design.

NFTs meet DeFi

Teller’s service is part of a growing wave of NFT-centric financial infrastructure, including lending platforms such as NFTfi and Arcade. These platforms allow NFT owners to take out cryptocurrency loans using the NFTs as collateral. Teller’s platform, on the other hand, facilitates the purchase of NFTs via loans.

There are risks involved here, of course. The NFT market is known for being unstable, and lenders take the chance that a particular NFT project may lose significant value during the loan window. However, if the buyer defaults and does not repay the loan, the lender can claim NFT and try to sell it to recover losses, if they want.

Such a platform could also offer opportunities for abuse. For example, if someone had inside information about a major announcement around an NFT collection that they thought would pump the value, then they could benefit from making a purchase now, paying later loans at the current price, and effectively preventing the expected price increase.

Presented with the potential scenario, Berkun indicated that it was an issue that the broader crypto and NFT industry must struggle with and develop ethical standards around. He pointed to the situation with former OpenSea boss Nate Chastain, who benefited buying and selling NFTs using privileged information. Chastain now faces federal charges.

“This is a very important question for us as an industry to ask ourselves: How can these products be manipulated?” he said. “Right now we do not have any kind of ethos in the room to limit those with insider knowledge not to buy an NFT. Car protection will be built around it. I think that is how the industry will mature in general.”

“This type of financing is like buying any product with a credit card, or buy now, pay later program today,” he added. “The action would be to stop the person [with insider info]instead of the platform itself. ”

Berkun believes that this feature for buy now, pay later will be all the more useful as NFT utility cases spread, with things like music NFTs, virtual land in metavers games, and even NFTs representing real estate are starting to gain more traction.

“This is the core infrastructure, I think, where Web3 goes,” he said, “especially when we start thinking about the intersection of DeFi and the NFT site. “

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