Interest in nonfungible tokens (NFTs) is booming. The technology has captured the attention of millions worldwide, from crypto enthusiasts to more mainstream audiences, prompting branding opportunities for household names such as Louis Vuitton, Gucci, Tommy Hilfiger and Mercedes-Benz.
Recent DappRadar statistics show wallets trading NFTs expanded from around half a million in 2020 to 28.6 million in 2021. However, until now, the underlying collateral tied to NFTs has remained locked in owners’ wallets.
Wing Finance is solving that problem, offering competitive APR rates via its new NFT pool that supports six blue-chip NFT collections: CryptoPunks, Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), The Meebits, Azuki and Clone X.
Wing: Pioneering NFT lending
As one of the first entrants in the NFT lending pool market, Wing is pioneering a unique, innovative method to unlock NFTs’ value.
Wing’s NFT pool adopts a peer-to-pool lending model: Users can supply Ether (ETH) in the asset pool to provide liquidity to the lending pool. Suppliers can earn ETH interest from borrowers and pWING — an ERC-20-protocol variant of Wing Finance (WING) — incentives from the pool. Users can borrow ETH by collateralizing NFTs, and borrowers can earn pWING incentives subject to interest.
Collateralized NFTs go into the NFT-collateral pool, and borrowers receive a corresponding functional NFT. When calculating the health factor — i.e., the numeric representation of the deposited assets’ safety against borrowed assets’ value — and liquidating, NFT prices are calculated from the floor price, meaning buyers could potentially purchase the cheapest NFTs through the liquidation market with 20% off.
NFT lenders must pay attention to collateral value to ensure their assets’ security. The Wing NFT pool calculates the time-weighted average floor price to filter price fluctuations from OpenSea and LooksRare to optimize fairness.
Insurance pool mechanism explained
Wing’s insurance pool mechanism sets it apart from other crypto-lending platforms by ensuring underlying asset security for NFT lenders and the project as a whole. WING tokenholders can earn WING incentives by ensuring the pool’s security.
Similar to existing flash pools, the NFT pool takes advantage of Wing’s insurance pool to protect lenders from market volatility that could lead to under-collateralized lending — a risk-management feature missing from much of the decentralized finance (DeFi) space.
A new approach to unlocking value
The NFT pool gives users a new method to unlock their NFTs’ value without having to sell them and opens DeFi lending and borrowing for many new users, letting them use their NFT portfolios as loan collateral. Wing wants to lead the NFT-collateralization space to revolutionize its expanding market as one of the first DeFi protocols supporting this lending and borrowing mechanism.
Wing is deploying the NFT pool on the Ethereum chain for ease of access and planning cross-chain interoperability in the near future. The NFT pool will eventually leverage other blockchains such as Polygon and Solana to help Wing become a credit-based, cross-chain DeFi platform. The Wing decentralized autonomous organization (DAO) may also propose and vote on further expanding its NFT support to include additional blue-chip NFT collections.
The NFT pool’s participation mechanism is designed to be as simple and accessible as possible for lenders and borrowers. Once users join the Wing DAO, other NFT holders can vote for projects they support with WING tokens.
Wing is a credit-based, cross-chain decentralized lending platform. Through its partnerships, Wing explores credit-based, under-collateralized, synthetic and security token-lending markets. As a DeFi platform dedicated to digital asset-lending, it supports cross-chain interactions for a variety of DeFi products.