Solana Sunday: NFT Lending with Sharky.Fi
Utility is a word that is frequently thrown around within the NFT space because there is so much supply available that requires demand; and while many use cases for NFTs have begun to develop, there is still a major concern about the general public’s demand for NFTs.
However, as confusing as NFTs are to the general public, NFT lending protocols are still valuable methods of providing utilities to non-fungible tokens similar to other lending and borrowing business models that exist in various financial markets.
Knowing this, the team at Sharky.Fi is making considerable headway on the Solana network to become the premier NFT lending platform for Solana users.
What is NFT lending?
NFT lending is a similar concept to other forms of lending. In both cases, there is going to be a lender and a borrower making an agreement to loan against collateral (the NFT in this case).
Borrower
The borrower is a person that holds an NFT and is looking to give it to someone else in exchange for cryptocurrency. In this event, the borrower will have to return the cryptocurrency in full plus interest after the agreed upon amount of time in order to receive their NFT back.
Lender
A lender, in web3, can either be a person, group, or protocol that offers cryptocurrency in exchange for a brief holding of a certain NFT. The amount of cryptocurrency that they are willing to lend out depends on the value of the NFT being offered.
Collateral
The collateral is a certain item which has a specific value attached to it. In this case, the collateral being exchanged for cryptocurrencies is an NFT. Because the value of NFTs is so volatile, and only a few collections retain legitimate value, lenders have to consider which NFTs are worth becoming collateral before making a decision.
What sharky does differently
What makes Sharkly unique is their commitment to instant cash loans with widely accepted tokens. According to their documentation, they will begin providing loans using SOL instead of their own derivative token which has to establish value before becoming a desirable asset for lenders and borrowers.
Their next step is to add USDT to their list of accepted tokens because it is also a widely used cryptocurrency which has become popular among DeFi communities for its stability.
However, there are still plans being made to begin a new token called $FISHY by the Sharky team which does not have any details yet in their documentation, so it is obvious that they want to establish a well-oiled lending platform with valuable assets before throwing their own tokens into the mix.
Fortunately, this may not take a long time for the Sharky team following the significant amount of success that they've received within the last week on the Solana network. It appears that many people within the Solana community are quite excited about this useful new layer of NFT utilities being created.
Issues in the past with NFT Lending
Sharky isn’t the first group to explore the concept of NFT lending though. Earlier this summer, other protocols such as BendDAO made significant headlines with their lending protocol which risked many high-value assets such as Bored Ape Yacht Club tokens and Moonbirds which were at risk of being liquidated.
With such extreme risks being cast onto many of the most valuable NFTs in the crypto space, it’s important to develop a lending protocol in which people are not going to risk losing everything they offer for loans.
Although this isn’t a major concern for Sharky, it’s still the primary code that needs to be cracked in order for NFT lending to become a realistic and popular feature for blockchain assets. Fortunately, Sharky appears to be led by a competent team that is doing their best to provide a trustworthy Dapp.
