In the event of a loan default, the nft, which also functions as a property title, automatically returns to the lender through a predefined smart contract, demonstrating the tangible value of the digital collateral.
The potential for this type of secured funding has already drawn a lot of attention, as evidenced by the over $400 million in nft-based loans on NFTfi, including high-profile digital art pieces from collections like Cryptopunks and BAYC , with a combined loan volume of a tremendous $164 million.
As new financial frameworks develop, the integration of blockchain technology into asset management is expected to lead to a reshaping of credit methodologies suitable for the digital age.
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