How to reduce the risk of NFT loans?

Is there a risk that the price of the NFT could be intentionally raised to obtain a loan above its market value? How to prevent this from happening?

The Lender should have basic research on the value of the NFT before placing a loan bid. Lender can view the NFT collection on Marketplace (Such as floor price, volume traded, and it's community), and offer a reasonable loan amount based on it's value and LTV ratio.
If you have a good understanding of this NFT, then Borrower's inability to repay also means that you could own this NFT at a price much lower than the market value.
In addition, we believe that the mechanism of the floor price will become more and more mature, and everyone will have more comprehensive information for reference in the near future.

How to deal with the risk that the collateralized NFT might become worthless?

The best solution is to shorten the loan duration (up to 60 days), whether you are a borrower or a lender.

What will affect the interest rate of NFT's first and second loan?

From the perspective of P2P lending, the principal and interest of each new loan are negotiated by both parties. Theoretically: NFT markets are highly volatile, and both lenders and borrowers tend to increase interest rates and shorten loan duration. If market volatility for NFTs decreases, both parties will tend to stabilize interest rates and set longer loan terms.

NFT might be out of fashion soon. Is there any way to keep them going?

The ICO fever in 2018 was also questioned. But the ICO proved one thing: Tokens have value, and their value can be stored. Now NFTs are in the same situation.
There is no doubt that NFTs have their value. To make NFT more mainstream,NFT derivatives, such as NFT lending and short selling, are needed to make NFT more playable and variable.
Copy link