The DeFi Platform Taking NFTs to the Next Level – Press Release Bitcoin News

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PRESS RELEASE. On February 14th, the highly anticipated Blur airdrop finally kicked off. According to Dune Analytics, as of February 15th, over 40,000 addresses have claimed the Blur airdrop, with 8.2% of them receiving over 10,000 tokens. Most users received between 1,000 and 10,000 BLUR tokens, with 7,000 tokens distributed to each user on average. On CoinEx, the BLUR price was around $0.8 on the distribution day. Based on this figure, Blur airdrop provided users with tokens worth $5,600 on average, making it another airdrop legend after Aptos airdrop.

Behind Blur’s boom: The NFT blue ocean

As a newcomer to the NFT market, Blur has captured the spotlight over the past year. Since its launch in March 2022, the project has gained a massive following through its airdrop announcement. Meanwhile, the aggregation system, which enables frequent trading, has gained widespread recognition among active NFT traders. In fact, Blur has surpassed OpenSea, which is the #1 NFT marketplace, in terms of trading volume, which shows the fierce competition in the NFT market.

The popularity of Blur indicates that although there is a high demand for NFTs, the market and its derivative tools are still underdeveloped. Data from NFTGO shows that the market capitalization of three top projects, especially BAYC, CryptoPunks and Otherside, has already reached 2 million ETH, which is worth over $3.1 billion according to the real-time ETH price on CoinEx.

That said, the unique characteristics of NFTs make it difficult for us to accurately capture the value of each NFT. Like traditional collectibles, different NFTs come with different features, and the characteristic preferred by collectors may offer an NFT a different price tag. The lack of clear valuation methods makes NFT trading more challenging than FT trading, which also blocks the market circulation of NFTs and results in poor liquidity.

Moreover, blue-chip NFTs are often expensive and inaccessible to retail investors, which hinders the development of the NFT market. Although the No.1 crypto Bitcoin is listed at $20,000, retail investors can buy 0.01 or even a smaller amount on exchanges. However, the floor price of Bored Ape Yacht Club (BAYC) is 67 ETH, which is worth over $100,000, making it unaffordable for regular investors.

The NFT market has continued to explore new ways to address these issues, which sparked the appearance of the NFTFi category, which spans NFT marketplaces and aggregators, lending, leasing, derivatives, sharding and oracles.

NFT marketplace and aggregator

NFT marketplaces are considered the core of the entire NFT ecosystem. With an NFT marketplace, users can list their NFTs or buy NFTs from others at any time. Also, most NFT trading platforms offer multiple sale models, including fixed price sales, Dutch auctions, English auctions and private transactions. Right now, trending NFT marketplaces include OpenSea, Rarible, LooksRare, and X2Y2. Apart from OpenSea, all these projects have issued their own tokens and you can always check them out on CoinEx if you are interested in trading these tokens.

Apart from centralized marketplaces, some decentralized projects are working to solve NFT’s poor liquidity. For example, Sudoswap introduced the AMM mechanism to DEXs in the NFT market. This allows users to provide liquidity and benefit from instant pricing through trade matching on Sudoswap, which addresses the liquidity problem in the decentralized NFT market. However, this method is more suitable for NFT projects that rank in the middle or bottom of the market because the AMM mechanism eliminates rarity differences. Meanwhile, AMM is not applicable for blue-chip NFT projects, as they are subject to larger price differences.

In the NFT market, if a seller listed an NFT on OpenSea, users who only use LooksRare will not be able to see that NFT. As a result, when buyers search for their favorite NFT, they may have to switch between multiple NFT markets, which significantly increases time costs.

This has led to the rise of aggregators, which have become an important channel for buying NFTs. For example, in addition to its own marketplace, Blur also brings together OpenSea, LooksRare and X2Y2, allowing traders to quickly review the essential statistics of the relevant NFTs on just one platform. For professional traders, aggregators like Blur are much more efficient than regular marketplaces like OpenSea.

Many top projects try to distribute their own aggregator. Uniswap, a well-known DEX, recently acquired Genie and launched its own NFT aggregator, which supports popular NFT marketplaces such as OpenSea, X2Y2, LooksRare, Sudoswap, Larva Labs, Foundation, NFT20 and NFTX. OpenSea has also acquired NFT marketplace aggregator Gem, which brings together platforms that include OpenSea, Rarible, LooksRare, X2Y2, NFTX and NFT20.

NFT lending

NFT lending has emerged as a significant part of the NFTFi category. Many NFT holders hope to obtain temporary liquidity without selling their assets, which has led to an increasing demand for NFT loans. Currently, NFT lending mainly comprises two models: Peer-to-Peer and Peer-to-Pool.

NFTfi is a typical provider of peer-to-peer lending services. This lending model allows borrowers and lenders to negotiate all lending terms, including amount, term, interest rate and liquidation method. As such, Peer-to-Peer lending has smaller interest rate spreads and since there is no need for external oracles, users are not exposed to oracle risk. That said, Peer-to-Peer lending is subject to high time costs and borrowers may have to spend a long time finding suitable lenders.

Many NFT lending platforms have leveraged AAVE’s lending model, using the Peer-to-Pool approach, where the protocol matches the two sides and makes decisions on behalf of lenders. This approach is more efficient and enables rapid matching, but lacks capital efficiency and is subject to significant interest rate spreads. For example, if there is 1000 ETH in the pool, but the borrower only wants to borrow 500 ETH, the interest he/she paid will be distributed evenly among all lenders, meaning the lenders will receive a much smaller interest payment. As a result, most of the funds in the pool are not fully utilized. In addition, under the Peer-to-Pool model, the platform can be operated by users. For example, the well-known NFT lending platform BendDAO experienced liquidity crises due to the liquidation of NFTs during a market downturn.

NFT rental

Last year, Ethereum approved the smart contract standard ERC-4907, which introduced the concept of “expiration” to enable collateral-free NFT rental through contracts. Unsecured rentals allow NFTs to be packaged in a way that preserves their original properties, but the packaged NFT will be destroyed when the rental period expires. Since the release of ERC-4907, collateralless leasing has become the common approach in the NFT rental market, replacing conventional collateralized leasing, and most platforms including reNFT have adopted collateralless collateral. Despite that, NFT rental is still a small market, as the demand for renting blue-chip NFTs is limited, and most application scenarios for NFT rental are in fields including gaming and metaverse lands.

NFT derivatives

In the financial sector, derivatives are indispensable products, and NFTF’s experiments with derivatives have also attracted attention in the market. Many platforms work with NFT-based futures and options, despite their lack of popularity. For example, nftperp provides NFT futures, which allows investors to go long or short on NFTs, while NiftyOption offers NFT options. Right now, the NFT derivative market is still in its infancy, but as the relevant products are upgraded, investors will be able to hedge against price fluctuations in the NFT market through various strategies.

NFT fragmentation

Since NFTs are indivisible, blue-chip NFTs like BAYC and CryptoPunks are extremely expensive, making it a challenge for retail investors to get in the game. To solve the problem, many projects are exploring NFT fragmentation, i.e. splitting NFTs into several fragments that investors can buy and share the returns. Fractional.art, a leading NFT fragmentation project, offers Uniswap-based trading features that allow users to trade fragmented NFTs anytime, anywhere. Despite its advantages, NFT fragmentation also faces challenges, such as potential disputes over the distribution of airdrop benefits.

NFT oracles

Accurately capturing NFT prices has always been one of the biggest challenges in the NFT market because prices affect a wide range of operations, including borrowing and settlement. In light of that, NFT oracles were launched to solve the problem of NFT valuation. For example, Abacus oracle uses a peer incentive pricing mechanism and the Abacus Spot liquidity assessment to provide NFT pricing services, which accurately capture the value of an NFT. Other platforms such as Upshot and Banksea are also exploring their own pricing mechanisms. With a focus on accurate real-time NFT pricing, oracle projects compete fiercely in the sector.

Conclusion

NFTFi is an essential part of the NFT market, and NFT segments strive for a common goal: to achieve large-scale circulation of NFTs and make them more accessible. Currently, many NFTFi projects are still at a nascent stage and can present impressive innovations that will lead to exponential growth in the NFT market. For example, Blur’s third airdrop triggered a rapid increase in the transaction volume and floor price of blue-chip NFTs such as BAYC and Azuki. Similarly, the development of NFT infrastructure will also attract more users to the market.

BLUR and many innovative NFTFi tokens are now available on CoinEx (https://www.coinex.com/), you can go to the exchange to trade the latest NFTFi token anytime. In addition, CoinEx has announced the promotion “NFTFi Special Event: Join Trading Volume Ranking, 5000 USDT For Grabs”, from February 16 to February 22, 2023 (UTC).

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