As the craze for non-fungible tokens grows, crypto exchange Kraken is developing an intriguing use case for them. Kraken is working on a new non-fungible token marketplace that will allow users to borrow dollars against their NFTs. Then, in addition to offering digital art.
While crypto collateral lending and borrowing services are already available. Also, Kraken intends to expand this use case to include NFT collectibles. As a result, users will be able to keep their NFT ownership while borrowing funds against it. Customers will now be able to use the Kraken NFT marketplace for custodial services.
Kraken CEO Jesse Powell told Bloomberg that the exchange is developing a mechanism to assess the liquidation value of the NFTs deposited. He continued,
“If you deposit a CryptoPunk on Kraken, we want to be able to reflect the value of that in your account. And if you want to borrow funds against that”.
The year 2021 has been the year of non-fungible tokens (NFTs), with trading volumes exceeding $23 billion. In the field of NFTs, there has been a lot of retail and institutional interest. NFTs are not a novel concept, according to Powell, and they were used in the early days of cryptography. He was referring to the process of adding metadata to the bitcoin blockchain’s history. Powell stated,
“It’s kind of shocking. For the first 10 years of Bitcoin we were trying so hard to sell people on why they should be interested in Bitcoin. I guess it took the right combination of events. So, something really popular like NBA Top Shots that really got people talking about it.”
So, on how the NFT market is maturing, Powell said:
“Phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs”.
NFT marketplaces have already been opened by several Kraken competitors, including Binance and FTX Exchange. Coinbase, a publicly traded cryptocurrency exchange, is also considering entering the NFT game.