NFT baskets, financial NFTs and the evolution of NFTs
Non-fungible tokens (NFTs) are already challenging concepts of ownership, property, and value. In their current form, they enable true ownership of digital commodities, releasing creativity into the virtual world as a collaborative venture between parties and sparking a new creative economy.
Non-fungible tokens, or NFTs, are cryptographic assets on the blockchain that include unique identification codes and metadata to distinguish them from one another. Unlike bitcoins, which are similar, NFTs cannot be traded or exchanged at equivalence, which is why they can be utilized as a medium for commercial transactions.
Over the past year, the NFT space has gained momentum, more innovative initiatives have come to fruition, and the NFT community has grown even further. The number of active his NFT collections has increased from 193 in early March 2021 to over 3,000 by the end of 2021, the highest number ever. His NFT marketplaces such as OpenSea, LooksRare and X2Y2 saw record amounts of collections this year. Experienced trading and trading activity. However, as the market grew and matured, we began to see more creative initiatives like NFT baskets.
NFTs in finance
Explorations of integrating NFTs into more realistic scenarios of finance are conceiving the concept of “Financial NFTs” with the development of Decentralized Finance. For example, lending project 88mph uses NFT to implement fixed-interest rate lending, insurance project Armor Finance uses NFT as its insurance token for coverage, fractional ownership platform NIFTEX is doing NFT financialization using ERC-20, and the LP token of Uniswap v3 is the most well-known exploration of Financial NFT.
NFT-based DeFi is at the forefront of blockchain (and finance!) ecosystems. It’s incredibly exciting, and we intend for PECULIUM to evolve with it while also pushing it to new heights.
The most important takeaways from this essay should be a grasp of what the NFTfi Promissory Note token is and what it performs. It is an ERC721 NFT that symbolizes the Investment portfolio to which you have subscribed, as well as the right/ability to collect the interest/yield or NFT from the smart contract at the end of the Investment contract term.
It appears that financial NFTs are NFTs that are used in financial settings. However, Financial NFT refers to an improved version of NFTs with a brand-new token standard that may enable it to express the multi-dimensional qualities of assets in the form of computable NFTs.
Financial NFTs can be divided into several derivatives/portions that can be transferred to other people. This feature improves dynamic token allocations within a basket by greatly increasing the flexibility of their management. Dynamic allocation NFTs can be freely exchanged on the NFT Marketplace or on OpenSea. They can also be used as collateral on NFTfi to obtain liquidity prior to their release date if necessary.
Advantages: Trade allocations, like any other NFT, allow for even earlier price/value discovery prior to any basket price fluctuation.
Financial NFTs: The Real NFT Boom Is Still Ahead
The current non-fungible token (NFT) explosion may have led you to believe that NFTs are only for digital art and collectibles. For a time, they were — after all, who could ignore the iconic Beeple piece, which sold at Christie’s for $69 million?
However, tokenizing digital art is only one of many conceivable NFT uses. Simply said, NFTs are adaptable digital certificates of authenticity. Anything that would benefit from having its ownership more easily transferrable, verifiable, and compatible with the blockchain in the future is likely to be represented by an NFT.
This is where Financial NFTs enter the picture.
Financial NFTs comprise everything from insurance and bonds to unique baskets of tokens and tokenized real-world assets — and they’re on track to be the largest single application of NFT technology to date.
A significant example just appeared in Uniswap v3, which began issuing liquidity provision tokens (claims on tokens supplied by market makers) as NFTs — that’s $1.3 billion in value now represented as NFT assets from a single protocol.
Aside from Uniswap, NFTs have already begun to be used for financial purposes in a number of ways. This includes the following:
- Yearn.finance insurance contracts underwritten by Nexus Mutual are being sold on Rarible as NFTs.
- Solv Protocol is programming investment contracts into NFTs to improve transparency and transfer of project tokens.
- UFiT DAO creates “basket” NFTs by combining several fungible and non-fungible tokens.
- Charged Particles is combining existing NFTs with interest-bearing ERC20 tokens.
NFTs are set to capture a large proportion of value in decentralized finance (DeFi), a rapidly-growing sector already holding almost $60 billion in value. Just a conservative 10% of DeFi positions represented as NFTs would equate to $6 billion in financial NFT assets — and the DeFi pie isn’t anywhere near done growing.