All about Crypto & Blockchain

How NFTs are incorporated in DeFi


NFTs (Non-Fungible Tokens) is a new technology, and it comes except for not being used as security for regularity purposes. This exception doesn’t obligate the brokers to register themselves, which is a significant factor in the current market frenzy regarding the NFTs. However, financialization is still a gravitational force in this field, especially for the cryptocurrencies like Ethereum(ETH), Bitcoin (BTC), Dogecoin (DOGE), and Polkadot(DOT). The NFTs are gradually turning themselves into the form of securities designed with the addition of governance rights and dividends.

It is easy to use as collateral for Defi

The Non-Fungible Tokens are not very different from the structure of the other cryptocurrencies, and they can be used efficiently for the integration into some complicated financial products. They can also be used as collateral for Defi loans and other various financial instruments. The smooth transaction of all these financial tools will still need modifications.

The co-founder of Swarm Markets, Philipp Pieper, mentioned in one of his statements that owning a single-asset market makes it hard for the right kind of discovery and price transparency.

Other ways of using it as Defi

The use of Defi becomes more solvable if the NFTs are in large series, for example, CryptoPunks. Some of the Punks can be used as a price oracle for the rest of the assets. You can also create a type of NFTs basket with the ETH pair in a liquidity pool, which will provide you with the whole basket of NFTs with the market value. It further also unlocks the problem of price discovery.

Leave A Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More