When Rolling Stone declared that all NFTs were worthless a few months back, it ruffled a few feathers in Web3. Now, one influencer has decided to fight back in his own unique way.
Last week, Gmoney, CEO of crypto lifestyle platform 9dcc, took out a $1 million loan on CryptoPunk #8219, one of 24 ‘Apes’ in the collection and one of the most recognizable NFT profile-pictures on X. People are calling it the largest loan to date on an NFT lending platform.
The $1 million loan, deposited in stablecoin USDC, comes through Gondi, which facilitates loans between individuals and NFT holders, typically for high-profile collections like Punks, Autoglyphs, and Chromie Squiggles.
Asked on Rug Radio why he decided to take out the loan, Gmoney specifically mentioned the Rolling Stone article, saying “What better way to show [NFTs] are not worthless” than by taking out a $1 million loan against one.
The loan has 14% APR, which means in the six-month period it is active, Gmoney will have to pay $69,000 in interest. The action sparked a great deal of discussion on X, with many people calling the loan amount fair given the high price Ape Punks typically command.
Although the CryptoPunk collection floor price is around $140,000 USD, Apes typically sell for millions, with one even selling for $10 million in December of 2021.
Gondi Version1 was launched in July 2023 to test a proof-of-concept, debuting a platform that created a more efficient credit market for NFT-backed loans. It is the main competitor to Arcade, another lending platform. Gmoney has invested in both.
Lending Platforms Boom in Bear Market
Bear markets are notorious for low prices and trading volume. The space becomes awfully dull, by crypto standards at least. In this past bear market, one thing we saw in the NFT sector was lack of liquidity. People owned high-priced JPEGs but were unable to access their underlying monetary value.
Enter NFT lending platforms.
In 2023, we saw the birth of many platforms that catered specifically to NFT holders, offering the possibility of taking out loans against assets and acquiring some cash flow.
One of those lending protocols came from Binance, which unveiled its platform nine months ago. Early on, it supported just four collections (Bored Ape Yacht Club, Mutant Ape Yacht Club, Azuki, and Doodles), all on the Ethereum blockchain.
Loans could be liquidated depending on a “health factor” that included the floor price of the collection and the outstanding debt and interest of the loan.
Another lending platform that sprouted up was Blend, courtesy of the Ethereum marketplace Blur. That platform also focused on Ethereum NFT collections, but introduced features other platforms hadn’t implemented yet, including the infinite loan, a lack of oracles (people overseeing loan agreements), and more.
As these stories and today’s headline shows, NFT lending is a big deal and could become even more so in the next bull run. Because NFTs are inherently illiquid assets, having a way to create some liquidity could be good for NFT holders. And, of course, degens like to take risks.