Binance NFT, a prominent player in the non-fungible token (NFT) market, has announced the launch of a new feature, Binance NFT Loan. The service, set to go live at 11:00 (UTC) on May 26, 2023, will enable NFT owners to secure Ethereum (ETH) loans using their NFTs as collateral.
This new feature is designed to provide NFT owners with an alternative way to leverage the value of their assets without selling them. The structure of the loan service is overcollateralized, open-term, and peer-to-pool, with different Loan-to-Value (LTV) ratios for each NFT collateral-loan pair position.
The service promises instant liquidity, zero gas fees, liquidity protection, and competitive interest rates. However, as of the launch date, the service will only support Ethereum (ETH) loans, and NFTs from specific collections – Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Azuki, and Doodles – as collateral options. Binance NFT has indicated plans to expand the range of borrowable assets and NFT collateral options in the future.
To coincide with the launch, Binance NFT is offering a promotional discount on NFT Loan interest rates. Starting from the launch time, users who secure an NFT loan from Binance NFT can enjoy a 70% discount on the current borrowing interest rates. The duration of this promotion is unspecified.
Binance NFT has expressed its commitment to integrating more NFT collections and blockchains into its loan product and optimizing its features to broaden its offerings. To use the Binance NFT loan, users are required to complete identity verification. NFTs can be found via the Binance NFT Marketplace under My NFTs > Collected.
However, it’s important to note that there are inherent risks associated with NFT Loans. NFTs are subject to high market risk, and the risk of liquidation increases when the value of the NFT collateral drops significantly. Binance advises users to conduct their own research and seek independent professional advice to determine if this product is suitable for them.