South Africa’s NFTfi raises $5M so people can use their NFTs as collateral for loans – TechCrunch

South Africa’s NFTfi raises $5M so people can use their NFTs as collateral for loans – TechCrunch

Once regarded as a fad (for some, it still is), NFTs, digital assets that depict real-world objects, are becoming increasingly popular within and outside the crypto world.

But with large amounts of capital locked into illiquid NFTs, more people are looking for ways to unlock liquidity without selling their NFTs.

This market is one South African company NFTfi targets and has raised a seed round of $5 million to continue pioneering the financialization of NFTs. Early-stage crypto fund 1kx led the round, with Ashton Kutcher’s Sound Ventures, Maven 11, Scalar Capital, Kleiner Perkins and others participating

Founded by Stephen Young in February 2020, NFTfi acts as a marketplace where users can get a cryptocurrency loan on their NFTs and offer loans to borrowers against their NFTsIn other words, users can use their NFTs as collateral to get loans from other users on the decentralized and peer-to-peer system.

For example, if a user comes to the platform to borrow $10,000, different lenders would propose to the borrower offers with varying interest rates and payments terms, from which the borrower could then select

Meanwhile, the borrower will need to submit an NFT as part of the transaction. When the transaction is made, the NFT gets transferred into NFTfi’s smart contract (no one, including the NFTfi team, will have access to it) while the borrower receives the money

Once the loan gets paid with interest to the lender, the NFT returns to the borrower’s wallet. If the loan is not repaid during the allocated
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