Lend against your NFT to foster adequate decision making.

Disclaimer: This is article 1 of 3 in a sub educational from main article and I would advise all to read it first before digesting into these.

One of the benefits of leveraging with NFT as collateral, is the freedom to create what I like to call thinking space. In the fungible world, the majority of coin/token investors does this by simply setting a threshold at X amount of liquidity to Y projects. It’s not that simple in NFT’s. For mostly two reasons. (1) You can’t buy 0.42 of the NFT in an open marketplace¹(2) It’s often costy.

This often lures NFT collectors into a trap, going past their treshold. And for those who’ve been in this space for a while, have seen the trading volume skyrocketing and the capital flowing from project A to project B in the blink of an eye. Why? One reason is because we all want to end up with the winner, and not the Old Maid.

Let’s play a game:

Collector 1 has passed his threshold to invest in Aurory and put all his liquidity into the one Aurorian at -30 $SOL. He’s left with 0.2 $SOL in his Phantom wallet.
Collector 2 does the same. He got in for 30$SOL as well, but got a lower rank and is left with the same amount of 0.2$SOL in his wallet.

Then they both get exposed to an investment object for another Solana game, minting in 3 hours. Lets call it project XY

Collector 1 instantly feels that he/she needs to jump on this train. But does only worry about how it’s possible to get those 0.8$ SOL to afford the mint. End up listing it for 0.5 below floor price to get a fast sale. Instantly refreshing marketplace to check if it gets sold.

Collector 2 starts to check how much liquidity it’s possible to get for the Aurorian. Oh, 8 sol? That will do the job. Enters the thinking space and collector starts the due diligence and educate him/herself about the project.

Which of these situations would you prefer to be in? let’s see what’s happening at mint.

Collector 1 managed to mint 3 but was gutted he didn’t get more.

Collector 2 chose to mint only 1, using his WL-token.

Let’s fast forward to marketplace listing

Collector 1 sees the listings below mint price and starts to panic.

Collector 2 sees the same, but it was expected, since the supply was high and a lot of early adopters got it for 0.5 $SOL pre-mint.

What happens next?

Collector 1 starts to panic and lists all three at FP. Selling at loss.

Collector 2 starts to use the rest of the 7 $SOL to buy when listings go down,and ends up with 10 NFTs, possibly buying from collector 1.

One week later:

Collector 1 has inserted fiat into his phantom wallet to re-buy an Aurorian at 31$SOL price and can’t stand to check his Twitter feed stating that project XY hit a new milestone.

Collector 2 sold half of his XY-NFTs and bought another Aurorian and repaid his loan. Gladly checking his Twitter and Phantom wallet, where his two Aurorians sit comfortably alongside the five XY-NFTs.

Indeed, this scenario has a lot of if’s and it’s not that simple. But, to mark my point. The power of leveraging comes when it gives you freedom to create a thinking space for yourself. Fostering adequate decision making, so you can react to the market in a professional manner. Eliminating the strong feelings of fear and euphoria, and not putting too much at risk. A great benefit and advantage if you ask me.

(1) Yes, for some collections you can buy a fractionalized NFTs.

Never ever have I had a dream to become a financial advisor. Therefore I am not a financial advisor and you should do your own research and not just listen to random people on the internet. Nothing contained in this publication should be construed as investment advice- its just for educational purposes.