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At the height of the NFT mania in 2021 and 2022, it seemed logical to borrow money against an NFT, albeit new. Prices for non-fungible tokens have been sky-high — some in the millions — particularly for pieces in blue-chip collections like Bored Ape Yacht Club and CryptoPunks.
Advocates such as Arcade CEO Gabe Frank, who created a protocol to facilitate NFT lending between individuals and organizations, said the concept was smart because people who intelligently (or luckily) owned multiple NFTs could unlock liquidity tax-free without selling their assets. They could reinvest that liquidity in other NFTs or cryptocurrencies, or put it into real-world assets and borrow against what was then considered a relatively safe digital asset, as long as someone is willing to lend, he said.
This year, with some of the largest NFT collections falling in value and a crypto market still struggling, I wasn’t sure if this concept was still a smart idea.
That hasn’t stopped Blur, now the largest NFT marketplace by transaction volume (OpenSea still has more users), from launching its own lending product, Blend, which has already issued 33,580 ethers, or about $61 million, since its launch earlier this month , credit value, according to Dune.
But while other lending products have focused on relatively longer-term lending—say, three or six months, admittedly a lot for the high-speed Web3 space—Blur, true to its speculative nature, has focused on 24-hour person-to-personal lending, with no fees for the use of the platform where one lender can shift exposure to another via a Dutch auction at their whim.
Although Frank, from rival NFT lender Arcade, said that Blend’s popularity bodes well for the NFT lending ecosystem as a whole, he’s not so sure which model Blur chose. He also believes that minimum prices for Blend’s accepted NFT collections such as BAYC, Mutant Ape Yacht Club, Azuki, Wrapped Cryptopunks, DeGods and Miladys could be increasingly volatile going forward.
“It’s primarily aimed at traders and speculators using (Blur’s) points/rewards system, rather than organic lending activity,” Frank told me in an email. “Not so good for collectors or borrowers with assets above the threshold looking for fixed-term loans.”
For his part, Blur told me via Twitter DM: “Blend offers higher loan amounts and lower interest rates than any other loan protocol on the market.”
As for Arcade, to my surprise he said that the credit business was better than expected. According to Dune, the platform made loans to 500 borrowers in 2023, compared to Blend’s 988 individual borrowers. The Arcade protocol has enabled approximately $45 million in loans so far in 2023.
Frank said that because of Arcade’s high APR (16.5% on average), there are even more people willing to lend than people looking for a loan. I’m still not sure if this model can last long, but it opens an interesting window on that what possibilities Web3 offers for the financial world.
Competition among lenders on Arcade is slowly lowering interest rates for borrowers on an annual basis, to the point where even Frank was able to use a CryptoPunk he owned to get a six-month 45 Ether loan ($81,600) at an interest rate of 9%. APR– lower than the 9.5% APR on his Toyota Tacoma loan.
In other news
Ubisoft licensed a number of Assassin’s Creed NFTs that also exist as physical characters in a cube, according to VGC. The non-fungible tokens represent characters from the games and are called “digital souls” whose weapons, outfits and looks can be edited with a companion app. The collectibles are managed by Integral Reality Laboratories and is recorded on the polygon Blockchain.
Sky Mavisthe company behind it Axe Infinityhas released a lite version of the Web3 game for mobile devices that does not require the purchase of NFT Axies. Axie Infinity: Origins provides players with “starter” Axies – the game’s fluffy, fighting protagonists – but players with existing Axies from the desktop version can also use theirs, decrypt reported.
Web3 company One of And Globe Entertainment published a series of printed photos by Marilyn Monroe that doubles as NFTs. The 40 photos (20 x 10 inches) have a near-field communication label on the back that allows the blockchain-backed certificate of authenticity of each photo to be displayed. The images from the Kim Goodwin archive, Start at $300 each.
Chubby penguins released NFT-inspired toys that are rumored to have already grossed half a million dollars. Created by PMI, which also makes products for video games Fourteen days And Between usThe toys are Pudgy Penguin’s attempt to reach more mainstream consumers.
Horizon blockchain games integrated its wallet and infrastructure stack, Serieswith Polygon Labs’ Polygon Supermesh, which helps app developers customize and extend the block space according to their needs. Horizon’s Sequence aims to enable improved scalability, security and user experience for blockchain technology.
This story was originally featured on Fortune.com
More from Fortune:
5 side hustles that can make you over $20,000 a year — all while working from home
Do you want to earn extra money? This CD currently has an APR of 5.15%
Buy a house? Find out how much you can save here
That’s how much money you need to make annually to comfortably buy a $600,000 home