NFT-Collat??eralizing South African startup raises US$5 million in the latest seed round – Defi Bitcoin News

According to reports, South African startup NFTfi recently raised $5 million, and the company intends to use the funds to promote its non-fungible token (NFT) mortgage business.

Cryptocurrency loan market

According to Techcrunch report, NFTfi’s US$5 million financing was led by Sound Ventures of American actor Ashton Kutcher. Other investors participating in this round of financing include Maven 11, Scalar Capital and Kleiner Perkins.

The company was founded by Stephen Young in February 2020 and has become a market where users can obtain NFT cryptocurrency loans and provide NFT loans to borrowers. The report explains that by staking their tokens, NFT holders will be able to release liquidity without selling them.

Since facilitating its first loan in May 2020, NFTfi claims to have conducted more than 1,500 such transactions on its platform.

Pricing dynamics

The report quoted Young as saying how the borrowing process started and what would happen if the borrower defaulted. In the same report, Young also outlined the dynamics of pricing between lenders and borrowers on NFTfi. He said:

The lender wants to leave some space between the asset price and the loan amount. This is because in the event that someone defaults, they need to be able to sell it at a price lower than the market value, and the price may fall in between. So this is why they need such a large buffer between the value of the loan and the value of the actual asset.

Young revealed that although 20% of loans on the NFTfi platform are in arrears, these are mainly loans of lower value. According to the founder of NFTfi, this is mainly because high-value NFTs are very unique and difficult to obtain. Therefore, users will fund the loans they want the borrower to default, thereby handing over the NFT.

The top NFT loans on NFTfi span popular digital collectibles on the Ethereum blockchain, including Art Blocks, Bored Ape Yacht Club, Cryptopunks, Autoglyphs, Meebits, and Vee Friends.

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