CirrusNFT claims the transaction was completed without any exchange of personal information.
Recently, a token collector has narrated a unique transaction where a loan was secured in the decentralized finance (DeFi) sphere using a non-fungible token (NFT) embodying a luxury watch.
On July 11th, a DeFi project advisor dubbed CirrusNFT described the sequence of events that led to an individual securing a $35,000 loan from another participant.
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe - We publish new crypto explainer videos every week!
What is Aurora in Crypto? NEAR Protocol Token Explained (ANIMATED)
The borrower dispatched a luxury Patek Phillipe timepiece to 4K Protocol. It is worth noting that 4K Protocol's main line of business is serving as an escrow for NFTs, which are backed by tangible commodities.
Upon dispatching the watch to 4K Protocol, the luxury item was created into NFT and sent to the owner, thus granting the borrower a novel form of collateral.
Following this, the newly minted NFT was uploaded on a DeFi lending platform, Arcade. Prospective lenders then presented their loan offers to the borrower. This display of offers provided the borrower with a buffet of choices, which they perused and eventually settled on the most favorable offer.
Afterward, the NFT was sent to an escrow wallet until the loan was cleared or in the unfortunate circumstance of a default. Should the borrower falter in their repayment, the lender becomes the new owner of the NFT. The owner of the NFT can burn the digital asset to claim the watch.
CirrusNFT provided further insight into the nature of these transactions, highlighting the blanket of anonymity enveloping the parties involved. He revealed that the participants can lend and borrow without any exchange of personal information, rendering the process completely anonymous.
It will be fascinating to see how innovative finance practices, such as this intriguing use of an NFT-backed loan, challenge the conventional dynamics of lending and borrowing.
