Binance Crypto exchange has launched a non-fungible crypto token (NFT) loan feature, which allows users to borrow Ethereum (ETH) by keeping their blue-chip Non-Fungible Token (NFTs) as collateral.
In traditional finance, assets such as gold and real estate are kept as collateral to secure loans. On the other hand, Non-Fungible Token (NFTs) can likewise serve a similar use case.
Blue-Chip Non-Fungible Token (NFT) as Collateral for Binance Crypto exchange Loan
Binance Crypto exchange announced the launch of the “ Non-Fungible Token (NFT) loan” facility, allowing users to borrow Ethereum (ETH) by keeping their Non-Fungible Token (NFTs) as collateral.
Changpeng Zhao’s company will facilitate the service through a peer-to-pool approach, wherein it will serve as a pool for loans.
Owners of only four collections, namely Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Azuki, and Doodles, can be used as collateral. Nonetheless, Binance Crypto exchange desires to expand to more collections and blockchains teck in the future.
At the beginning, the platform is keeping the annual interest price at 3.36 percent and will thereafter increase it to 11.20%. The loan-to-value ratio is 40 percent for Doodles, 50 percent for Azuki and MAYC, and 60 percent for BAYC collections.