As the NFT mania reaches new heights, crypto exchange Kraken is working on an interesting use case for non-fungible tokens. Moving beyond just offering digital art, Kraken is working on a new non-fungible token marketplace that will allow users to borrow funds against their NFTs.
While we have seen crypto collateral lending and borrowing services, Kraken plans to extend this use case even with NFT collectibles. Thus, users will be able to keep their NFT ownership intact while being able to borrow funds against that. Furthermore, the Kraken NFT marketplace will also provide custodial services to its customers.
Speaking to Bloomberg, Kraken CEO Jesse Powell said that the exchange is working on a system that can determine the liquidation value of the NFT deposited. He added:
“If you deposit a CryptoPunk on Kraken, we want to be able to reflect the value of that in your account. And if you want to borrow funds against that”.
2021 has been the Year of NFTs
The year 2021 has been the year of non-fungible tokens (NFTs) which have clocked more than $23 billion in trading volumes. There’s been strong retail and institutional participation in the space of NFTs. Powell noted that the concept of NFTs is not new but existed in the early days of crypto. He referred to the process of tagging past of the bitcoin blockchain with metadata. Powell said:
“It’s kind of shocking. For the first 10 years of Bitcoin we were trying so hard to sell people on why they should be interested in Bitcoin. I guess it took the right combination of events, something really popular like NBA Top Shots that really got people talking about it.”
Commenting upon how the NFT market is maturing, Powell said: “Phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs”.
Several Kraken competitors in the market like BINANCE and FTX Exchange have already launched NFT marketplaces. Public-listed crypto exchange COINBASE is also looking to enter this game of NFTs.
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