2022 will unlock the gates to the full value of your NFTs: Here’s why and how.
Since the creation of Bitcoin in 2009, the crypto community has been searching for new and disruptive ways to improve society through blockchain technology, working hand in hand in the pursuit of mutual progress.
In early 2018, we found one in the form of non-fungible tokens. NFTs were originally used for collecting digital cats, but have since been adopted by artists, designers, game developers, musicians, and writers as a way to securely store and sell digital assets.
With the help of NFTs, artists and creators can now sell their work directly to fans and collectors, giving them more control over how their work is used and distributed. This is paving the way for a decentralized and collaborative industry that brings wealth, innovation and creativity to the world. In addition, every single day new utilities and applications for NFTs are being adopted transversally across industries around the globe: art, gaming, memberships, real-world tokenization, logistics, Metaverse, social networks, streaming media… you name it.
Follow the community. Trust the data.
While NFTs have been around for less than three years, their impact on the digital world is already evident. And you frens do not seem to be in the mood to slow down its dizzying growth: organic adoption has increased 800% year-on-year with over 2.5M daily active wallets.
Sales of NFTs surged to $23B in 2021, a 23x increase year-on-year — driven by a huge supply increase and the addition of new collections across different protocols. Artists are growing hand in hand with the community, which is sparking a decentralized digital art economy for the first time in history. Game on.
The market is maturing quickly, with that effervescent activity that has characterized the key trends in blockchain history, and with Metaverse and gaming NFTs joining collectibles at the top.
The last months of the past year witnessed how the seed that had been planted in Ethereum years ago, blossomed into a cross-chain future.
Debt is the key to the door of efficiency
NFTs provide a level of security and authenticity that was previously not possible with digital assets. The niche has grown into an industry. And every industry needs the right tools to drive capital efficiency and unlock the full value of its assets. And this is where Unlockd comes in.
After this breeding ground of disruptive innovation, it’s time to turn the financialization of NFTs into mainstream reality. And this is achieved by getting closer to the real world, but done properly.
The utility of NFTs is growing exponentially. As the range of use cases expands, increasing value will be locked into them. Yield opportunities, access to exclusive perks in DeFi, in the Metaverse, in the entertainment industry, in music and in practically every area of society that involves digital interaction between human beings. And there are also some really cool JPEGs, you know.
All the value funnelling into the crypto community from these synergies between NFTs and their applications will be partially locked in the opportunity cost of acquiring them.
How can we unlock it?
Unlockd proposes a solution: debt.
Debt will fuel the financialization of NFTs
Modern economies are debt-driven and both public and private institutions utilize debt to accelerate their growth.
We all — builders, users, degens and JPEG collectors — have adopted this debt-based model because we know that the unique volatility of the crypto market means that leveraging your wealth, in a responsible and controlled way, can give you the opportunity to make it.
Debt collateralized by illiquid assets or future cash flows is a type of financing that has been used for centuries. This type of financing allows lenders to secure their loan by using the borrower’s assets as collateral. If the borrower defaults on the loan, the lender can seize the collateral and sell it to repay the loan.
This financing is the most used by businesses all over the world to finance their operations, but also by individuals in their everyday life — to finance the purchase of a house or a car, for example. But how does this differ from the way debt works at DeFi?
In DeFi, debt is typically over-collateralized by “cash-equivalents” such as cryptocurrency, which is tremendously inefficient. The degree of over-collateralization must be sufficient to guarantee the safety of the lender, since there are no mechanisms to hold the borrower accountable in the hypothetical event that the liquidation of its collateral is not enough to repay the loan.
The crypto industry still lacks better debt solutions.
The current problem with NFTs is that they lock your wealth into an asset that usually is not able to generate yield like other digital assets. Moreover, the lack of current liquidity in the market can be a problem for holders as it means that they may have difficulty selling their NFTs. This leads to NFTs being sold at a discount or not being sold at all, which is a problem if you need to access your capital in the short-term, or if you need to cover unexpected expenses.
Certainly, these conditions become severely problematic if we are looking for DeFi users to get the most out of their portfolios by being capital-efficient.
Builders are reacting to this paradigm change quickly, and some Peer-To-Peer loan marketplaces are already available: Peer-to-peer NFT-backed loans work by allowing borrowers to display in the marketplace their NFTs as collateral for a loan. Lenders can then choose to loan money to the borrower based on the value of the NFTs. Once the loan is repaid, the NFTs are returned to the borrower.
Although this initial model tries to meet the basic demand of NFT-collateralized debt, it suffers from many limitations — a clear lack of efficiency matching supply and demand, inflexible maturity periods, and higher interest rates that do not fit the real market needs.
Moreover, where goes all the inherent usefulness of that NFT we were talking about earlier? It’s blocked. Yes, it’s true that this P2P model frees up liquidity, but at the cost of not being eligible for airdrops, not being able to access exclusive perks, not being able to benefit from their use in Play-To-Earn ecosystems… is it really worth it?
What’s the alternative? Unlockd.
Meet Unlockd: the future of NFT financialization
Unlock is the protocol that unlocks the full liquidity and utility of the digital assets economy. Our money market allows DeFi, Art, Real-World and Gaming users to compound their wealth with an NFT-backed, cross-chain and instant loan.
And the coolest part: without losing ownership of your collateral. You still enjoy 100% of the perks and advantages of having the assets in your wallet, but with additional capital that will totally reframe your approach to DeFi, P2E, collecting or whatever degen strategy you have decided to pursue.
See, we are pioneering here. That’s why our vision is challenging and inspiring: to help people achieve financial freedom by unlocking the full value of their digital assets.
The opportunity cost of locking up your wealth in NFTs could leave you out of several of the greatest investments of this decade. Now more than ever, you need to be capital efficient to keep up with the fast pace of the industry.
Unlockd gives you access to unprecedented additional capital while maintaining ownership of your NFTs, so you can benefit from once-in-a-lifetime yield opportunities, diversify your crypto portfolio, buy more JPEGs, expand your P2E resources, leverage your trading or even buy a house in the real world. Options are limitless.
How is Unlockd better than Peer-2-Peer loans marketplaces?
Two words: liquidity pools.
Lenders deposit their assets in pools to receive yield in exchange for their liquidity contribution. Borrowers take over-collateralized loans, with no fixed expiration date, instantaneously, with a fair interest rate, and against their NFTs — if they are part of the eligible collections. This interest is used to pay lenders’ yields, distribute rewards to token holders and grow the DAO treasury.
How is Unlockd better than other pool-based loans solutions?
What’s the point of mitigating the opportunity cost of buying an NFT if you lose the exclusive benefits of holding it? What good is the liquidity you unlock with a loan if you block your access to a potential airdrop?
At Unlockd we are committed to unlocking all the utility and liquidity of your assets.
Therefore, when you take a loan in Unlockd by depositing your NFT as collateral, you continue to enjoy all the utility that NFT may have in other protocols, communities or organizations. Of course, you can’t move or sell it — but you probably already figured that out.
And then there is the interoperability issue.
The value of an NFT is currently capped by the value of the protocol or ecosystem it lives in. How many times have you given up on acquiring that NFT you just irrationally love because it’s not in the ecosystem you frequent?
Unlockd is a cross-chain NFT-backed lending protocol, which means that the NFT deposited as collateral and the tokens borrowed don’t need to be on the same chain. With Unlockd cross-chain liquidity, your uncommon investments become the fuel you need in the protocols you use.
Let’s have an example: you discover a promising drop… Now what? The friction of the process begins: not only do you have to redistribute your capital, but you have to get the tokens you need and don’t have: swaps, bridges and an infuriating amount of fees and waiting time.
With Unlockd, this winding road becomes a breeze. Collateralize your NFTs and unlock instant cross-chain liquidity: your new acquisition is now a couple of clicks away.
And what about appraisals and liquidations? Our Data Science team is currently developing a custom statistical model to dynamically and accurately quantify the value of the NFTs provided as collateral. Very soon we will share with you all the math stuff and explanatory content; when taking loans in DeFi, we believe that users should be fully aware of the risks and benefits of their Unlockd strategies.
Future is interoperable and cooperative
Unlockd emerges to be the interconnected highway that allows liquidity to flow between blockchains, protocols and communities — building a solid intersection between the NFT industry and DeFi.
Like lego pieces, the technology we are developing will also allow for unique symbioses with marketplaces, renting protocols, guilds, P2E games, yield aggregators and a myriad of other decentralized applications.
This opens the gates to the true financialization of NFTs, with unprecedented financial products in the history of the economy, involving instant collateralizations to finance new purchases in the form of debt and new strategies focused on cross-chain efficiency that you, our community, will help us discover.
Technical stuff sounds great but… wen token?
We want to make our products and services accessible to as many people as possible, in a fair and decentralized manner. We believe in the power of democratization, and we put our joint long-term vision above any economic incentives we may ever have. We resonate with the trustless philosophy of blockchain and work tirelessly to create systems that are transparent and reliable. That’s why we will transition into the Unlockd DAO as soon as the governance can be deployed.
Our tokenomics will be available soon in our docs. Stay tuned! A substantial part of the total supply of our governance token will be destined to the community, with a huge airdrop in appreciation for those of you that support and use Unlockd.
And, as a bonus, we are up to something very, very interesting… that may have to do with a pioneering collection of NFTs with real utility within the Unlockd ecosystem…
Art, JPEGs or Gaming, Metaverse assets or Real-World tokenization, Utility NFTs or Financial Instruments: we believe in a world where all digital assets are as valuable and useful as non-fungible physical assets.
We are building something awesome, but we need a community to serve and we need feedback. Soon you will be able to test our Beta and help us improve.
Your support for Unlockd is an inspiration for the whole team (public team, by the way!), thank you. It helps us a lot to grow if you follow us and share our news on Twitter and Telegram, and invite your frens to actively participate in our lovely Discord community. Also, you can now visit our freshly launched website — our docs will be available very soon!
Become part of the revolution. Unlock the future of the digital economy with us.