What happens to an NFT if a borrower defaults?

In theory, they could also take ownership of an NFT used as collateral if a borrower defaults. The interest rates for loans on Arcade can vary depending on the type of NFT, the duration of the loan, and the loan to value ratio—calculated by looking at the difference in the loan amount and the appraised value of the NFTs.

What are NFTS & how do they work?

They also get exclusive ownership rights. NFTs can have only one owner at a time, and their use of blockchain technology makes it easy to verify ownership and transfer tokens between owners. The creator can also store specific information in an NFT’s metadata. For instance, artists can sign their artwork by including their signature in the file.

How does the NFT loan app work?

Borrowers who use the site must connect their crypto wallets to the loan app. The website automatically shows which NFTs they own and asks them to pick the ones they’d like to use as collateral. They also enter their desired loan amount, the duration of the loan, and the amount they’re willing to repay at the end.

Can NFTS be used as collateral?

Independent lenders are increasingly using services like Arcade to connect with NFT owners who want to borrow money by using their NFTs as collateral. The idea is to give people who sink large amounts of money into NFTs, an increasingly popular investment, a way to get some cash without having to sell their digital assets.