Innovation can be the way that can narrate the blockchain arena in the best possible way. DeFiers and crypto enthusiasts have witnessed and embraced these innovations. Precisely, Decentralized Finance is a remarkable force behind the rise of Blockchain technology. The other concept in the crypto world that has emerged vivaciously is NFT aka Non-Fungible Tokens. Exploring NFT in the DeFi world is exciting with leverage of newness. But, before we begin to do that, we need to understand what value is? Why? Because it holds an important place in the NFT and the complete DeFi world.
What Is The Value And Its Importance In The NFTs?
The quality that makes a product/service desirable in the marketplace is the Value.
Value of NFTs= Utility + Ownership history + Future value + Liquidity premium
With the assistance of the above framework, you can evaluate the Value of an NFT. The cryptographic tokens represent an artwork, an event, or any digital asset, which might confuse you about the Value that it holds. The value it holds is indeed valuable and exceptional. They represent unique, not interchangeable and rare assets that are entirely secured through blockchain technology. This makes it the best suit for Dapps, where you can create and own unique digital assets. NFTs traded at exchanges are unique, and one can get its own price.
Landing Upon To DeFi
A financial system created in the arena of blockchain technology is called Decentralized Finance or the DeFi. It is built on a number of blockchain networks, but the Ethereum blockchain network is the most famous one. Every aspect of traditional banking has been transformed in the DeFi world, including lending, borrowing, staking, etc.
NFT And DeFi
NFTs have value. NFTs offer a value proposition. Here are some of the features of NFTs;
- Limited supply
- Verifiable scarcity
- Unique
- Indivisible
- Specific use
Now, coming to DeFi, DeFi walks along with all the financial instruments, processes, solutions, and services. What will happen if NFTs and DeFi are mixed? NFTs have value, and DeFi can unlock Value.
NFTs have a niche market of digital assets. These digital assets cannot be utilized for financial activities. There is a difference between the working of both worlds. The pricing system of DeFi is determined through price oracles. It is a data retrieving factor that permits DeFi platforms to deploy various price-data. Everything, right from stocks to cryptocurrencies, price is retrieved. But can it be done for an NFT? Because selling and distributing NFTs are done through auction.
Turn Our Tables Of Traditional Finance With DeFi And NFT
The issue that we need to clear is who has the authority to put Value in the tokens. So, let’s turn the table. Instead of the platform deciding the price of an NFT, let the lender decide it. As a borrower, you can choose the loan amount and can opt for your NFT as collateral. Your lender will value the loan amount and the collateralized NFT on their own independent calculations. If everyone agrees with the formula and its execution, a loan is passed.
Some Of The Current DeFi NFT Offerings
The above-explained method is the one way of utilizing the NFTs in the DeFi world. Some of the latest examples are mentioned below;
- Rarible: It is one of the first projects that describes itself as a decentralized exchange for NFTs.
- Aavegotchi: It is another good combination of NFT and DeFi. It is a decentralized game platform.
- Tinlake: It focuses on offering bankless liquidity. It offers services that connect real-world assets and DeFi.
- NFTfi: A platform where NFT owners can lend their NFTs to others.
Conclusion
The potential of NFT has not been fully revealed yet. There are enormous ideas for integrating DeFi and NFTs. The radical approach towards this innovative technology has just started shedding its light on this world. In this digitalized world of cryptocurrencies, NFTs are the torch bearers of innovations. NFTs are the catalyst that brings more worthiness to the future of DeFi. The question of ownership, which has always been a problem for everyone, is done and dusted. Develop a DeFi-based NFT platform that provides meaning to your business with Cryptocurrency Exchange Script.
Place your foot in this bright future of NFT and DeFi with Cryptocurrency exchange script. You can develop a platform like rarible, a decentralized gaming platform like Aavegotchi, and whatnot? We are a powerful team of NFT enthusiasts that leave no stone unturned to bring success to your doorsteps. Our hands-on experience in The NFT can lead your business to flourish.