Teller’s Polygon-based platform lets users make a deposit and take out a loan to purchase Ethereum NFTs.
Buy now, pay later
Even after falling prices during the ongoing bear market, a Bored Ape Yacht Club NFT still costs over $ 104,000. The decentralized loan protocol Teller has found a solution to make this seem a little less intimidating:
Buy a ‘blue chip’ NFT now and pay later
Teller’s new feature is similar to that for startups like Affirm and Klarna. However, there are some important differences. It is currently only available for a small number of NFT projects. In addition, the funds are provided by potential lenders, who offer liquidity through the platform.
The service, called Ape Now, Pay Later, runs on the Ethereum scaling platform Polygon. Ryan Berkun, founder and CEO of Teller Finance, says that the platform helps to fill a need in the market. It gives potential buyers access to more expensive NFT assets by paying over time.
Buying NFTs is one of the things Web3 consumers want to do right now. Buy now, pay later is an easy matter.
– According to Berkun.
How does it work?
It goes like this. For example, if a user wants a Bored Ape Yacht Club NFT listed on the OpenSea marketplace, they can use the Teller platform to indicate that they want to purchase that asset. The user must pay a payment of not less than 50%, depending on the project. The platform then attempts to match the candidate with a lender.
If the match is successful and a lender accepts the terms, the deposit will be collected with the rest of the lender’s funds. The NFT is purchased from OpenSea and placed in a purse during the redemption cycle. If all payments are made on time, the borrower will receive the purchased NFT from the wallet.
Rising NFT market
An NFT is a blockchain token used to prove ownership of an item. They are used for works of art, profile pictures, access cards and tickets. The NFT market rose to a trading volume of $ 25 billion in 2021. It has already registered about $ 20 billion in trading this year.
Supported Ethereum NFT projects include Bored Ape Yacht Club and Mutant Ape Yacht Club. Moonbirds, Doodles, Cool Cats, Azuki, Meebits, Adidas Originals: Into the Metaverse, RTFKT-MNLTH and Murakami Flowers Seed are also participating.
For the Adidas NFTs, the lowest deposit is required, it is only 25% of the price. RTFKT-MNLTH and Murakami are each at 33%. For all other ‘blue chip’ collections, a minimum deposit of 50% is required.
Berkun said the rates were chosen based on factors such as market liquidity and volatility. For example, the Adidas NFTs are actually interchangeable as they all look the same and give the holders the same functionality. On the other hand, each Bored Ape or Doodle is unique.
New NFT infrastructure
Teller’s service is part of a burgeoning wave of NFT-centric financial infrastructure, including lending platforms such as NFTfi and Arcade. These platforms allow NFT owners to take out cryptocurrency loans using their NFTs as collateral.
Teller’s platform, on the other hand, facilitates the purchase of NFTs through loans, but it is not the only one. Cyan is another crypto startup offering a buy now, pay later feature to fund NFT purchases. It recently raised funding from Animoca Brands and OpenSea.
Of course, there are risks involved. The NFT market is known for its volatility, and lenders are betting that a particular NFT project may fall significantly in value over the life of the loan. However, if the buyer does not repay the loan, the lender can claim NFT and try to sell it to recover the losses.
Such a platform can also abuse this. For example, if someone has inside knowledge of a major announcement around an NFT collection that they believe will increase in value, they may benefit from a loan at the current price. In this way, the potential buyer is ahead of the expected price increase.
The new feature in the future
Berkun suggested that the crypto and NFT industries should consider these possible scenarios. He pointed to the situation with former OpenSea CEO Nate Chastain. He profited from buying and selling NFTs using privileged information. Chastain is now being charged. Berkun said the following about this:
“This is a really important question that we as an industry need to ask ourselves. How can these products be manipulated? At the moment we do not have any kind of ethos in this industry to limit them with internal knowledge from not buying NFT. Protective mechanisms will “This kind of financing is like buying a product with a credit card. The measure has to stop the insider, not the platform itself.”
Berkun believes the feature will become even more useful as NFT utility cases expand. Things like music NFTs, virtual land in metaverse games and even NFTs representing real-life real estate are increasingly popping up.
This is the core of the infrastructure where Web3 goes. Especially when we start thinking about the intersection between WiFi and the NFT world.