NFTfi is an NFT Lending platform deployed according to the leading P2P Lending model on the market today. Recently, NFTfi announced the launch of the Earn Season 1 program – a points program for participants active on the platform. So what is special about Earn Season 1 and will it help NFTfi explode? Let’s find out with Weakhand in this article.
Before jumping into the article, everyone can refer to some of the following articles to better understand
- What is NFTfi? Overview of NFTfi cryptocurrency
- NFT Lending: Models, Efficiencies & Opportunities
- What is Blend? Perpetual Lending Protocol for NFTs
What is NFTfi?
Overview of NFTfi
NFTfi is an NFT Lending platform deployed on Ethereum that allows users to use their NFTs as collateral to receive loans as well as allowing those with digital currency to earn interest from lending. NFTfi applies the P2P Lending model that allows connection between borrowers and lenders with terms agreed upon by both parties.
The goal of NFTfi is to provide a platform that enables the financialization of NFTs, empowering the community to build and develop the platform. Since the first loan in May 2020, NFTfi’s current total loan value has exceeded 400M USD with over 47,000 loans and has become one of the leading platforms in the NFT Lending market.
NFTfi operating model
NFTfi operating model
NFTfi’s operating model is quite simple, taking place in the following steps:
Step 1: Borrowers list their NFTs on the platform as collateral to create loans on the NFTfi platform.
Step 2: Lenders search for suitable loans and offer incentives to borrowers with parameters such as: Loan assets (wETH, DAI, USDC), loan amount, loan period, APR and offer expiration time.
Step 3: Borrowers search for suitable loans in the list of loan offers. In addition, the borrower can also make counter-offers to the lender with the terms of the loan.
Step 4: Upon accepting the loan offer, the borrower will trigger a transaction to create a new loan contract, the collateral NFT will be deposited into NFTfi’s escrow Smart Contract, and the loan amount will be transferred to the borrower’s wallet.
Step 5: The borrower can repay the loan + interest at any time before the expiration date. If the loan is not repaid, the collateral NFT will be liquidated and transferred to the borrower.
What is Earn Season 1?
On May 15, 2023, NFTfi announced the launch of Earn Season 1 as a program designed to reward friendly lending terms to borrowers and lenders.
The new scoring formula will be applied to loans on the NFTfi platform. The maximum points a given loan can receive is now decreasing much more slowly and is steady at 50% of the maximum points for loans in the 70 – 100% APR range. Loans with APRs above 100% do not earn points.
Bonus points depend on the loan APR
Additionally to attract user participation, the 500 wallets with the most points at the end of Earn Season 1 will receive a multiplier of up to 2.5x on their final balance. According to the project’s disclosure, Earn Season 1 will be released within 3-4 months but the detailed reward has not been revealed and will most likely be the project’s token.
How Earn Season 1 Impacts NFTfi
Earn Season 1 has had a positive impact on NFTfi. According to data from Dune Analytics, before the launch of Earn Season 1 and the announcement of loan volume and the number of users participating in the platform, there was impressive growth.
However, after that time we saw a serious decline in both volume and the number of people active on the platform. So what is the cause of this decrease?
In my personal opinion, the biggest reason for this decline lies in Blur when it launched Blend. Let’s go through the following chart:
Blur’s market share in both lending volume and daily users has seen impressive growth, and Blend also offers rewards to borrowers and lenders on its platform. Therefore, the implementation of Earn Season 1 has not made a difference and another reason is that users still do not know what rewards they earn, so it is difficult for NFTfi to attract more users through this activity.
summary
NFTfi is one of the leading NFT Lending platforms on the market today. The launch of Earn Season 1 has somewhat had a positive impact on NFTfi but has not really made a difference to attract users on other platforms to NFTfi. Above is all the information I want to introduce in this article, hope everyone has received useful knowledge.
