NFT lending platform NFTfi has launched the next iteration of the NFTfi Rewards reward programme. In the first season of Earn, users can earn points for offering loans that are good for borrowers and lending responsibly. NFTfi has revealed that Earn Season 1 is just a taste of what’s to come for its users during the summer.
Rapid expansion in the NFT sector depends critically on robust finance markets and NFTfi has stepped in to address this need. NFTfi is a decentralised, peer-to-peer lending platform where NFT holders can borrow ETH, USDC, and DAI using their NFTs as collateral. With this goal in mind, NFTfi’s Earn Season 1 reward structure was created to encourage ethical NFT lending and make a good impact on the NFT ecosystem as a whole.
Lending secured by NFT
When you pay off a qualifying debt, you get Earn Points in return. NFTfi Rewards members can track their Earn Points for each new loan they receive “unsecured points” in the main menu. These points become “secured points” upon loan repayment.
Earn Points are determined according to the following rules:
- You only earn points on repaid loans: To encourage responsible risk management of default by lenders through conservative LTVs and responsible borrowing by borrowers, this system awards points only for loans that are repaid in full.
- You earn more points for larger and longer-term loans: This aims to encourage lenders to offer borrowers a range of loan options, including long-term loans.
- Loans with a lower annual percentage rate (APR) score higher: This factor aims to encourage lenders to offer interest rates and LTVs that are favourable to borrowers while still being appropriate in light of the risk involved.
- Earn Points cannot be transferred to another accountant are not redeemable for cash at this time: They just reveal the consistency of NFTfi consumers’ loyalty. Participants in the NFTfi Rewards reward programme are not permitted to be citizens, permanent residents, or foreign nationals of the United States.
- Earn Points are displayed on the NFTfi Leaderboard, both when a loan is initiated and after it is repaid. The final point balances of the top 500 wallets as of the end of Season 1 will be multiplied by a maximum of 2.5x.
- No points are awarded for loans with APRs below 2%, no points are awarded for loans with a period of fewer than 3 days, and no points are awarded for connected wallets as part of NFTfi’s commitment to rewarding genuine users and discouraging wash loans.
NFT lending and NFTfi’s place in the market
NFT lending is a fast-growing industry that provides advantages like liquidity by letting NFT holders take out loans against their assets. It also helps in addressing concerns like the necessity for a thriving credit market in the NFT industry in the absence of traditional financing choices for NFT holders.
With NFTfi, both NFT holders and lenders can benefit from a new way of unlocking the value of assets and gaining access to liquid funds. Since its initial loan in May 2020, customers on the NFTfi smart contracts have transacted over $400 million. However, there is always a chance of losing money when investing in loans, and the value of NFTs can fluctuate wildly. Users taking out loans should give serious thought to their comfort with risk and their financial goals.