The dominant NFT market trend is increasing sales volumes, adoption, and liquidity. However, according to Matrixport Ventures’ Daniel Yan, a barrier in the evolving industry might be resolved by additional financial layers.
Brands such as Nike, Adidas, and Louis Vuitton have recently joined the NFT bandwagon. According to a CryptoSlam tracker, buyers have hit a high of 895,000. Yan told Blockworks that this is just the beginning of the story. Yan said, “When we talk about growth in the NFT market, we’re talking about the trading volume in marketplaces, primarily OpenSea.” “Volumes are substantially higher [than a year ago], but what is not really growing concurrently with this is liquidity of NFTs.”
Fleyshman’s NFT View on Liquidity:
He took CryptoPunks as an example mentioning that they have 10,000 on the peer-to-peer market with a set price on each. In regards to NFT “It’s pretty difficult to aggregate that liquidity,” Yan said. The idea of lending, fractionalization, rentals, etc., can aid in solving this issue. The Arca portfolio manager Sasha Fleyshman said in a statement to Blockworks. “Allow people more flexibility with how they use their capital.”
According to Fleyshman, such loans might allow consumers access to the value of assets that have risen dramatically. Without selling them and causing taxable events. Many people grow emotionally attached to their NFTs and refuse to part with them.
In the past week, MetaStreet and NFTfi facilitated the largest NFT-backed loan for 104 CryptoPunks, totaling $8.32 million. Blockworks has reported that the loan has a 10% interest rate (APR) and a 90-day timeframe.
Fleyshmans last words on the topic. “The first step along that path is finding a solid baseline in the derivatives markets, which has been worked on right now – fungible representations of collections, and as that market expands – typically its 5 to 10 times bigger than spot markets… and solidifies, well have a more liquid observable price, which protects the lending desks which then allows them to offer more attractive rates.” Fleyshman believes this will bring in a bigger audience and solve the issue.