Uniswap is reportedly in talks with several non-fungible token (NFT) lending protocols to build NFT financialisation.
In a Tweet made by Uniswap’s head of NFT product, Scott Lewis, Uniswap has expressed interest in solving “liquidity fragmentation and information asymmetry” with seven NFT lending protocols, respectively.
uniswap is the interface for all nft liquidity.
we are now in talks with 7 nft lending protocols. we will be working with each one to solve for liquidity fragmentation and information asymmetry. this is the first step to building nft financialization.
— Scott 🦄 (@Scott_eth) August 23, 2022
However, neither Uniswap nor Lewis are yet to reveal the seven partners involved, nor any further details regarding the project. Uniswap has been active in including NFTs in its services and products, and has nearly $6 billion in assets across all its liquidity pools.
What’s NFT Financialisation?
The financialisation of NFTs entails turning NFTs into a financial product. In doing so, liquidity and yields can be generated from NFTs. In addition, users can rent or use their NFTs as collateral or as another method to engage with trading cryptocurrency and digital assets.
Use cases for NFTs have exponentially increased since its boom in 2021. However, existing protocols lack enough utility to accommodate NFTs in the realm of finance – and by extension, decentralised finance (DeFi).
Current popular ways to finance NFTs include NFT lending and NFT rentals. Options to index NFTs in the same price bracket from the same collection are also growing, in addition to developers creating tools to statistically analyse NFT pricing.
Pricier NFTs are also being shared through NFT fractionalisation, where ownership on an NFT is shared between multiple people, further democratising NFTs, and creating sustained liquidity. NFT aggregators are also on the rise, which conveniently allow users to browse and trade NFTs across multiple marketplaces on supported networks, reducing gas fees in the trading process.
Feedback on Financialisation
Despite the DeFi sector experiencing huge tumbles throughout 2022 so far, Twitter users have added on to the conversation that Uniswap’s decision reflects that DeFi is “here to stay”. Others have suspected that Uniswap may have other motives, including taking advantage of liquidation profits through leveraging.
Crypto commentators on Twitter have noted that the market for the financialisation of NFTs is “relatively small but growing fast” – however more incentives for liquidity are still needed in order to truly sustain the system, alongside better support for NFT price estimates beyond using artificial intelligence, statistical, and machine learning as oracles.