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When DeFi Meets NFTs: here’s How a Lender got a $340,000 NFT After a Loan Wasn’t Paid Back

An NFT owner took out a 3.5 ETH loan three months ago and used one of their NFTs as collateral. The NFT’s worth has risen to $340,000 since then. However, they were unable to repay the debt, and the NFT was handed to the lender.

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Ethereum developers are starting to merge DeFi with NFTs, combining two of crypto’s biggest buzzwords – and it just lost someone a $340,000 NFT.

DeFi stands for decentralized finance and refers to any financial tool established on a decentralized platform, whereas NFTs are image-based tokens (and can have exorbitant values).

Traders have begun pledging NFTs as collateral when borrowing money through DeFi lending services in this scenario. The concept is that you could, for example, put up a 10 ETH NFT and then borrow 5 ETH as a loan. But, of course, you will forfeit the NFT if you do not repay the loan on time.

That’s precisely what happened in this case.

Taking out a loan by putting up an NFT

On the NFTfi platform, an NFT collector borrowed 3.5 ETH (now worth $12,600) about three months ago. They used an “Elevated Deconstructions” NFT from the Art Blocks Curated collection, selling for around 11 ETH ($39,600) at the time, making the loan. Although the most recent sale price for the NFT was 3.25 ETH ($11,700), it was less than the loan’s worth.

The value of these NFTs increased dramatically over that period. This was sparked in part by endorsements from Punk 6529 (the owner of that CryptoPunk’s Twitter account) and Cozomo de’ Medici, a pseudonymous art collector. As a result, they were quickly selling for 85 to 200 ETH ($306,000 to $720,000).

The three-month loan for 3.5 ETH came to an end yesterday, and the borrower had failed to repay the amount throughout that time. As a result, the lender received the collateral, which cost them 3.5 ETH but gave them the Elevated Deconstructions NFT.

The current floor price is 95 ETH ($342,000), which is the cheapest accessible NFT in this collection. In principle, this gives the lender a $329,000 deposit. However, despite the high floor price, the lender may not sell the NFT for this much.

In reality, it’s been 18 days since an Elevated Deconstructions NFT was sold. As a result, the borrower may have chosen to forego the loan to obtain immediate liquidity. This is implausible, though, because they could have considerably reduced the NFT price and still sold for more than 3.5 ETH.

Not for the first time

The fact that this NFT has been used as collateral twice in its lifespan — and both times the borrower has defaulted — adds an exciting twist to the story.

ACCORDING TO HISTORICAL DATA, this NFT was part of a loan that was defaulted on in April over a 3 ETH ($10,800) debt, which is how the previous owner gained it before giving it up over the weekend.

The former owner was involved in a few additional NFT-backed loans as well. They received their first liquidation in April after a 3 ETH loan was not repaid, and they received an Arago NFT. In May, they received 1 ETH (plus interest) back on loan guaranteed by a Decentraland parcel of property they had given out.

However, they haven’t been very active since the deal ended at the end of June. The wallet’s most recent transaction, according to blockchain statistics, was 58 days ago.

ART & COLLECTABLES

Ford is getting ready to enter the Metaverse with digital cars and NFTs

A month after the company announced significant personnel reductions, it has filed a trademark application covering its future initiatives in the Metaverse and NFT space.

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Ford Motor Company, an American automaker, has filed 19 trademark applications across its key automobile brands as it prepares to enter the realm of nonfungible tokens (NFTs) and the Metaverse.

Mike Kondoudis, a trademark attorney licensed by the United States Patent and Trade Office (USPTO), disclosed in a tweet on Wednesday that the business had submitted a total of 19 trademark applications covering its car brands, including Mustang, Bronco, Lincoln, Explorer, and F-150 Lightning, among others.

The trademark applications include a projected online marketplace for NFTs and virtual versions of its businesses’ automobiles, trucks, vans, SUVs, and clothes.

Ford intends to produce digital images of its vehicles, SUVs, trucks, and vans that will be verified by NFTs, according to USPTO filings submitted by the automaker on September 2.

The business also disclosed plans for “downloadable virtual commodities,” or “computer programs,” that would include apparel, accessories, and parts for vehicles for usage in “online virtual environments,” such as virtual and augmented reality trade exhibitions.

Additionally, there are plans to develop an online marketplace for “others’ digital artwork” as well as “online retail shop services featuring non-fungible tokens (NFTs) and digital collectibles.”

Less than a month after Ford Executive Chairman Bill Ford and CEO Jim Farley announced significant personnel reductions from its global workforce to decrease corporate expenses; Ford has decided to enter the Web3 area.

Ford isn’t the first automaker to enter the Metaverse market.

While premium automakers like Bentley and Lamborghini have already launched NFT collections, automakers including Nissan, Toyota, and Hyundai have indicated ambitions to enter the fast-expanding Metaverse market.

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ART & COLLECTABLES

Crypto-Vultures Profit from the Death of Queen Elizabeth

Only a few hours after the Queen’s passing, more than 40 meme tokens bearing her name have been released.

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Yesterday, according to Buckingham Palace, Her Majesty Queen Elizabeth II passed away. Although her loss triggered a global outpouring of sympathy and grief, it has also been exploited as a money-grab.

Elizabeth II, monarch
Grift endures eternally, but the Queen is gone.

There are over 40 meme coins on Ethereum and the Binance Smart Chain thanks to Queen Elizabeth’s passing (and at least one exploitative NFT collection).

While the news of the British monarch’s demise saddened people worldwide, cryptocurrency scammers took advantage of the occasion to launch dozens of meme coins with Queen themes on Ethereum and Binance’s BNB Chain.

Among the new crypto coins that were introduced are “Queen Elizabeth Inu,” “Queen Doge,” “God Save The Queen,” “London Bridge Is Down,” “Queen Grow,” “Rip Queen Elizabeth,” “Elizabeth II,” and “Queen Inu II.” Other tokens with the name of the next king, King Charles III, have also appeared. According to DexScreener, at least 40 separate meme coins appear to have been produced in the previous six hours.

The most liquid tokens, Save The Queen and Queen Elizabeth Inu, have already processed trade volumes of around $700,000 and $200,000 since their debut. At the time of writing, the price of Queen Elizabeth Inu is up 1,517%, while it has increased by 23,271% on Binance Smart Chain and 3,708% on Uniswap. Prices are incredibly unstable and exceedingly unlikely to persist.

The “Queen Elizabeth 69 Years NFT” NFT set has reportedly been produced. One image is said to represent each year of the Queen’s reign in the collection. The project’s aims should be questioned because Elizabeth II reigned for 70 years, not 69.

The crypto community, typically known for its gallows humor, mainly reacted negatively to the initiatives. When told about the NFT collection, NFT aficionado ThreadGuy said, “You’re going to hell.” Trader Byzantine General declared, “We’ve got to stop this crypto stuff.”

In 1926, Queen Elizabeth was born. She was the longest-reigning British monarch in history and passed away in Balmoral Castle at 96.

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ART & COLLECTABLES

One crypto sector, according to billionaire Chamath Palihapitiya, is experiencing a classic bubble cycle

One crypto sector may be going through a typical hype cycle, according to billionaire investor and software entrepreneur Chamath Palihapitiya.

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In a new episode of the All-In podcast, the CEO of Social Capital discusses the sharp decline in trading volume in the non-fungible token (NFT) market.

Palihapitiya offers Coachella and Burning Man as examples of major music festivals that strive to be distinctive but may wind up being mostly the same.

The billionaire contrasts NFTs and the overall art market with the two music events.

“I do believe that there is something going on; the simplest way to explain this is with the Burning Man/Coachella scenario. Many of these things are similar, but when some people approach anything new, they are too insecure to accept that it is similar to another item, so they spend a lot of time attempting to convince you that it is different. When someone says that a time is different, it’s probably not that different, as stated in the Warren Buffett quote, is an example. Or consider the other famous historical adage, “Things don’t always repeat in history, but they rhyme.”

All of this is meant to imply that, aside from major advances in science, not much new has been discovered recently. We keep repeating the same patterns, and one of them is the social capital that comes from making certain decisions and then having those decisions validated by others in order to feel valuable. And this occurred in NFTs, as well as, I’m sure, in the initial stages of several artistic movements. These events are more comparable than dissimilar because they have presumably occurred in a number of other markets as well.

Burning man and Coachella are same. The art market and NFTs are both the same. It doesn’t need to be unusual; you can simply appreciate it because you think it’s cool. I would just take it with a grain of salt and tell anyone who comes to you asking why it’s so different.

DappRadar reports that earlier last week, trading volume on popular NFT marketplace OpenSea reached a one-year low.

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