NFT Financialization: Trends and Opportunities

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· Competition is ramping up in the NFT lending and fractionalization space with a high degree of similar product features and roadmaps being offered

· Market is still in its nascency with untapped potential for new products and features to unlock greater value in NFTs

· Lending products are hard to scale currently due to a lack of reliable pricing mechanisms

· As the “Airbnb of the metaverse”, NFT rental marketplace has big potential and is a vertical that merits a close watch

· NFT pricing oracles are key to the success of most financialization primitives

· Aggregators can capture value more effectively with the use of gas saves and price fetching functions

Thinking about the financial layer of NFTs

In 2021, we witnessed tremendous growth in volume, reach and new users of NFTs and their applications.

The proliferation of NFT technology in the industries of Art and Collectibles, Games, Entertainment and Fashion, as well as use cases for community engagement, content monetization, social interaction have created deep and meaningful implications for all stakeholders of the NFT ecosystem — users, creators, and founders alike.

As new brands are being built, game experiences are being developed and dozens of metaverses are set to roll-out, marking a very exciting time for the community to participate and be immersed in the space.

That being said, with the rapid development and ambitious roadmaps published by NFT brands, games and metaverses, we are also seeing bottlenecks emerging in the current NFT technology stack. As builders create ever more novel applications for NFTs, we have yet to see corresponding development in the financial layer of NFTs to support such accelerated growth.

Critical issues to be addressed include:

· The difficulty of accessing liquidity for blue-chip NFT holders (i.e., Can I generate interest or take out loans against my CryptoPunks and Bored Apes?)

· Problems with maintaining community growth without raising barriers to participation

· Scaling issues with gaming guilds as they continue to grow their scholar base, as well as incubating new DAOs

· Limitations to yield generation on NFT assets owned by Metaverses landowners and developers

This report by Matrixport presents the latest development in NFT Financialization to facilitate a better understanding of the landscape, as well as the key developments within. We will also identify protocols and solutions that could potentially plug the gaps in the sector and fuel growth.

Three key areas will be discussed:

· The current NFT financialization landscape

· Pros and cons of the existing NFT protocols - Fractionalization, Lending, Rental, Pricing and Aggregators

· Key areas for product innovation

Matrixport is Asia’s largest crypto financial services platform with ~$10 billion worth of crypto under custody and management. We offer our users one-stop crypto financial services across lending, trading, asset management and structured products.

If you are building in this space, we would love to talk to you and see how we can contribute.

Download the full report here

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