{"id":121051,"date":"2023-07-11T21:24:58","date_gmt":"2023-07-11T21:24:58","guid":{"rendered":"https:\/\/dripp.zone\/news\/the-latest-nft-trend-taking-out-loans-on-rolexes-crypto-news\/"},"modified":"2023-07-11T21:25:01","modified_gmt":"2023-07-11T21:25:01","slug":"the-latest-nft-trend-taking-out-loans-on-rolexes-crypto-news","status":"publish","type":"post","link":"https:\/\/dripp.zone\/news\/the-latest-nft-trend-taking-out-loans-on-rolexes-crypto-news\/","title":{"rendered":"The Latest NFT Trend: Taking Out Loans on Rolexes\n – Crypto News"},"content":{"rendered":"
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Blockchain technology has already changed a lot about the way people interact. But some innovators are hoping to push the technology’s limits even further: they’re betting the blockchain can transform the world into one giant pawn shop. <\/span><\/p>\n

Arcade.xyz<\/span><\/a>a DeFi<\/a> protocols for NFT<\/a> lending, has begun facilitating loans between strangers that use luxury watches as collateral, and employ NFTs to guarantee those loans’ terms. <\/span><\/p>\n

In the past few weeks, Arcade users have lent three Rolexes to anonymous lenders for cash\u2014a Daytona, for $20,000 at 15% APR; a GMT-Master II, for $14,500 at 12% APR; and an Explorer for $20,000 at 12% APR. The owner of the Daytona and the Explorer also lent a Patek Philippe watch for $35,000 at 12% APR. The loans’ durations range from 56 to 90 days. <\/span><\/p>\n

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Coolest thing I saw on chain this week was a lender giving a stranger a $35,000 loan at 12% APR using a Patek Phillipe as collateral<\/p>\n

Borrower sent the watch to an escrow company who then sent back an NFT that represents ownership of the watch.<\/p>\n

The borrower then listed the NFT on\u2026 pic.twitter.com\/RZnIHX1DGQ<\/a><\/p>\n

\u2014 Cirrus (@CirrusNFT) July 10, 2023<\/a><\/p>\n<\/blockquote>\n<\/div>\n

Enabling the trade of such high-value physical assets for cash between online addresses is a chain of custody involving both third parties and NFTs. Borrowers send their watches to <\/span>4K<\/span><\/a>, an on-chain escrow protocol, and receive an NFT representing the timepiece’s ownership in return. Borrowers then list those NFTs on Arcade, waiting for the best loan offer. <\/span><\/p>\n

Once a borrower and lender are matched on Arcade, the watch-representing NFT is sent to an escrow wallet. The only way to get the watch back from 4K is to burn the NFT; at the end of a loan’s duration, it will either be returned to the borrower after the loan is repaid, or handed over to the lender if the borrower fades away into the shadows of the internet. <\/span><\/p>\n

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Remarkably, the entire loan process can be carried out without either party knowing the other’s identity\u2014a benefit that Arcade’s leadership believes could greatly increase the global pool of potential borrowers and lenders looking to leverage physical items.<\/span><\/p>\n

\u201cBorrowers can tap into global liquidity on permissionless peer-to-peer infrastructure, likely at much better rates than a pawn shop,\u201d Arcade founder and CEO Gabe Frank told <\/span>decrypt<\/span><\/i>,<\/span><\/p>\n

Borrowing against physical luxury goods is a new twist on the NFT lending phenomenon<\/a>, which has thus far generated over $2.5 billion worth of loans. Typically, users take out loans on high-value NFTs like CryptoPunks<\/a> and Bored Ape Yacht Club<\/a> profile picturesPFP’s<\/a>,<\/p>\n

according to a Dune dashboard<\/a>Arcade has processed nearly $100 million worth of NFT-based loans to date. The leading platform, Blend from NFT marketplace Blur, launched in May and quickly took over the market<\/a> thanks to trading incentives, with over $1.3 billion worth of NFT loans in just over two months.<\/p>\n

Frank, a former pawn broker himself, says Arcade has already completed concept loans leveraged against tokenized real estate, debt positions, and apparel, such as on-chain 9dcc shirts sold by NFT entrepreneur <\/span>gmoney<\/span><\/a>, <\/span><\/p>\n

“While we’re only at the beginning of utilizing physical goods on-chain,” Frank added, “it’s evident the potential is huge.”<\/span><\/p>\n

More than 30 such watches have now been represented via Ethereum<\/a> NFTs by 4K, according to an OpenSea marketplace listing<\/a>,<\/span><\/p>\n

To receive a watch back from 4K after a loan has completed, a user will need to burn their watch NFT and provide a shipping address, along with additional identification depending on the level of shipping insurance, according to 4K founder <\/span>Richard Lee<\/span><\/a>,<\/span><\/p>\n

Some elements of the physical realm, it appears, remain resistant to decentralization. <\/span><\/p>\n

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