CryptoPunks owner borrows $8.3 million as market for Ether NFT-backed loans heats up

According to Young, the default rate on transactions is about 11 percent, while the default rate on loan volume is less than 7 percent. This suggests that loans secured by lower-value NFTs are more likely to default, possibly due to the declining value of the assets. It is entirely possible that NFT holders benefit more from loan defaults alone.

Anyone with a bank account can borrow and lend. Anyone with a bank account can borrow and lend.

NFTfi is compatible with more than 150 Ether NFT pools, including Bored Ape Yacht Club, Art Blocks, VeeFriends and Mutant Ape Yacht Club. the platform's largest single NFT loan to date was for Autoglyph, a CryptoPunks founder Larva Labs' limited run program. The loan returned nearly $1.4 million to the borrower in October, according to MetaStreet.

However, it's not just businesses and organizations that provide liquidity for NFT-backed loans. According to Young, anyone with idle cryptocurrency can connect to the network and offer loans in order to get a higher interest rate from their funds - or try to protect the collateral NFT by defaulting.

Young explained that the market is becoming "more specialized," especially around blue-chip assets like CryptoPunks, Autoglyphs and Bored Apes. According to him, more institutional parties are providing liquidity, and some traders are developing artificial intelligence-powered robots to automatically evaluate assets and provide quotes.