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

The NFT market rebounded after a weak March, with more than $12 billion in trading volume in the first quarter.

While some borrowers are using NFT-backed loans to buy more NFTs or make crypto trades, others are using them to free up funds for real-world purposes. Young tells the story of a man who used Doodles NFT to get a 4 ETH loan to buy a truck to help with the Ukraine relief operation, and was able to get a 0% APR loan from the lender to help with that.

While the NFT market is still in its early stages, and the NFT-backed loan market even more so, Young believes the market could reach 10% penetration regarding overall NFT transaction volume. It is now expected to be 0.5 percent.

"As our lives become more and more digital, as more and more value accumulates in the digital space and more and more physical items are represented as NFT, I don't see the floodgates closing," Young continued. "As the value of these assets grows, consumers will need financial instruments."