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Home Blog NFT backed loans
Article by Yunis
22 May 2022 (Updated 2 December 2022)

Banking in Crypto - NFT backed loans

Banking in Crypto: Savings & Loans. You can borrow cash against your crypto coins and NFTs
NFT Loans - Borrow cash against your crypto coins and NFT logo
  • Get instant cash
  • BAYC and CryptoPunks NFTs are accepted
  • LTV is lower for NFT loans
  • NFT loans are relatively higher APR than crypto coin loans

Banking in Crypto: Saving & Loans. Borrow cash against your crypto coins and NFT

Did you know that you can use your crypto assets as collateral and get a loan? Many Crypto Saving & Lending platforms provide lending, borrowing, and trading services for crypto holders. In case of that, you need quick cash for urgent expenses but don't want to sell your crypto coins, you can borrow money from those platforms. Nexo, Coinloan, BlockFi, Celsius, and Ledn are leading crypto saving and lending platforms.

The recent news showed that Nexo started NFT-backed loan services. Nexo is a cryptocurrency platform that offers savings accounts, loans and some exchange services. The company is managing over $5Bn USD in assets for over 1 Million users worldwide. Nexo allows its users to use their crypto assets as collateral and get a loan.

What coins can be used as collateral?

All crypto lending platforms accept Bitcoin and Ethereum as collateral. Other accepted crypto coins vary by platform. SOL, ADA, AVAX, DOT, LTC, BCH, and XRP are widely accepted with some exceptions. The difference between different cryptos is LTV. LTV is Loan to Value and determines the amount that can be borrowed against the collateral. While Bitcoin has the highest LTV, different altcoins have different LTV.

The loan can be taken in a stablecoin or the collateral's initial cryptocurrency. Some platforms offer USDC, USDT, BUSD, and BTC, and some platforms offer only one or few of them.

NEXO's first NFT Loan

NFT loans are a new type of financial product. It is similar to fine art lending, a type of loan given to those who own a unique piece of art and decide to use it as collateral. For example, you have a Picassa painting, and it is worth $10M, and banks are willing to give you credit of a few million dollars against the art piece.

Crypto Lending platform Nexo announced that it had issued a loan against NFT collateral. The amount lent is over $3M. NFT holders can use their NFTs as collateral and borrow money. NFT loans are handled differently than standard crypto loans. Users who have an NFT and want to collateralize will be assigned an account manager. An account manager will provide a quote after evaluating the inquiry.

Loan to Value for NFT loans is relatively lower than other crypto coin loans. Nexo currently offers loans on NFTs up to 20% of the value of the NFT and accepts BAYC (Bored Ape Yacht Club) or CryptoPunks NFT collections only. BAYC and CryptoPunks are the most extensive NFT collections

Advantages of crypto loans

Crypto coins and NFT loans are an excellent way to access cash at a reasonable interest rate without selling assets. It can be advantageous, especially during the bear market times. No credit check is required for those loans. You won't get any hard inquiries, and your credit score won't be affected.

You can get a credit in ETH or stablecoins depending on your choice. The credit won't get liquidated if the price of your NFT goes down drastically. Your NFT will be returned to you automatically when you repay the loan. If you fail to repay the loan and accumulated interests exceed a specific ratio of the NFT value, Nexo will use NFT to repay the loan.

Important Message Definda does not provide any financial advice. All information is provided for research purposes only. DeFi is a rapidly evolving industry. Most businesses in the sector are very young and it is possible that some of them could go out of business in the future. Such an event could result in the loss of your investment. You should do your own research or consult a financial advisor before investing any money. Please read and satisfy yourself with our terms before continuing to use our website. We offer a free impartial comparison service of savings, loans and other DeFi products. We may receive a small commission from some of the companies listed, but this never influences our rankings. If you spot any errors in the information listed then please contact us at info@definda.com.

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