Binance NFT Loan peer-to-pool Loading...
MARKETPLACE May 2023

Binance revolutionizes the NFT world with innovative lending program

Binance, the cryptocurrency exchange giant known for its industry-leading trading volume, has announced the launch of its groundbreaking Ethereum-based non-fungible token (NFT) lending program. Now, users will be able to access loans in ETH through a peer-to-pool lending mechanism that uses NFT as collateral.

Holders of non-fungible tokens must provide additional collateral in excess of the value of the requested loan, meaning that the value of their NFTs must exceed the amount of money they wish to borrow. The term of the loan is extended indefinitely, providing flexibility to users.

The settlement of a loan can be done by a "health factor", which Binance has defined as: "Health factor = (NFT minimum price * settlement threshold) / interest-bearing debt". If the result of multiplying the minimum sale price of the NFT by the settlement threshold reaches the value of the outstanding loan debt plus interest, settlement takes place. This process is triggered when the health factor reaches the value of "1" and is carried out through a Dutch auction.

A Dutch auction is a type of auction in which the auctioneer starts by auctioning at a high price, which is lowered until some participant is willing to accept the auctioneer's price, or until the reserve price, which is the minimum price accepted for that sale, is reached.

At the time of this writing, the loaner program supports prominent NFT collections such as Bored Ape Yacht Club, Mutant Ape Yacht Club, Doodles and Azuki, among others. In general, NFT Blue Chips are the ones that apply as collateral for these transactions.

Mayur Kamat, in a press release, said: "We already count on low fees and the reliability of Binance. Now, NFT loans offer a new way for NFT holders to obtain liquidity, allowing them to participate in the market without having to part with their valuable assets."

Binance's NFT lending program has similarities in application to Blur's NFT marketplace through its Blend platform. Prospective borrowers will be able to benefit from the indefinite term flexibility offered by the program, providing a long-term solution to their liquidity needs in the NFT world.

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