What is NFTFi? Emerging Trends of the NFT Market

NFTFi is a rapidly growing niche market with the goal of unlocking value, opportunity, and liquidity to the NFT market.

What is NFTFi？

NFTFi, or “NFT finance” is an emerging ecosystem of decentralized applications and protocols (DeFi) that aim to provide financial utility to NFT.

NFTFi protocols will be responsible for bringing many DeFi functions to the NFT such as: unlocking the ability to rent, borrow, and shard NFTs, create derivatives markets, and make predictions. The purpose of NFTFi is to provide decentralized financial services to NFT market participants, thereby helping to generate profits, unlock liquidity, and diversify exposure and participation in the system. NFT financial ecology.

How does NFTFi work？

Loans and Loans NFT

Similar to DeFi currency markets like Aave, NFTFi lending and borrowing protocols allow NFT holders to lock their digital assets as collateral to unlock liquidity in other assets. NFT holders will lock their NFTs with a protocol. The holder can then borrow the digital assets by paying interest to the lender over time. In this case, the NFT acts as collateral in the event the owner defaults on their loan. On the other hand, NFT holders can repay their loan to get NFT back at any time. Through this process, NFT lending and lending protocols will give holders the ability to unlock liquidity from their NFT without necessarily selling the NFT.

NFT Segment

NFT sharding is the process of locking an NFT and minting a fungible token representing the underlying NFTs. The NFT segmentation process brings many new benefits to both NFT owners and potential buyers. By splitting the NFT, holders have only one way to sell their NFT. Instead of just listing the entire NFT for sale in the marketplace, they may choose to sell parts of the NFT at a lower price than the whole thing. NFT sharding helps users find better prices, as fungible tokens are more liquid than non-fungible tokens.

NFT Index

NFT indices are digital assets collateralized by portfolios representing the NFT market. These metrics can be tailored to accommodate various types of NFTs, such as profile picture collections, game NFTs, utility NFTs, etc. NFTFi protocol can provide container tokens NFTs from the top 10 NFT collections, with portfolio weights dictated by each collection's relative market cap. This provides users with exposure to the broader NFT market. Instead of having to own one NFT from each collection to gain the same overall market exposure, users only have to own a single index token.

NFT Prediction Market

The NFT prediction market allows users to make predictions about the price direction of the NFT and earn revenue if their predictions are correct. The prediction market allows swap markets to connect with a variety of financial incentives by changing

NFT price

data, users have complete access to the NFT market without having to own NFT. The prediction market serves as a risk mitigation tool for NFT holders, helping users hedge against market volatility.

Demand for an NFT floor price feed

A powerful source of NFT price data is required to securely and reliably deploy NFTFi protocols and use cases. Price data is needed to:

• Liquidation of collateral in NFT lending and lending protocols.

• Provides an initial price for fungible tokens representing a sharded NFT.

• Rebalance NFT index tokens collateralized by multiple NFTs.

• Tackle the NFT prediction markets.

NFT valuation is not a simple task. Compared to fungible tokens, NFTs are less liquid and have price differences based on the unique characteristics of each NFT. NFT price data source applications provide real-time analytics, powerful valuation methods, and provide timely and reliable data.

To address these challenges, Chainlink's NFT floor price feed has combined the secure, highly authentic approach of decentralized networks with the well-known Coinbase Cloud pricing method. Thereby, building high-quality floor price data to ensure the safety of NFT financial applications. This is how feeds work.

Coinbase Cloud scans price data across many well-known NFT markets and filters outliers and transactions from the dataset.

The individual data points are averaged using Coinbase Cloud's adaptive percentage prediction algorithm to arrive at a single floor price.

Prices are securely distributed to smart contract applications through a decentralized network.