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How NFTfi works

NFTfi allows Borrowers to use the NFTs they own to access the liquidity they need - in a safe, secure and anonymous way. Lenders can earn attractive yields efficiently, and have the chance to obtain rare assets at a steep discount in case of loan defaults.

How it works

Borrower lists their NFT on the NFTfi platform.

Interested lenders put in offers

Borrower accepts an offer

Borrower repays the loan

or

Borrower doesn't pay and lender forcloses the loan

Borrower lists their NFT on the NFTfi platform.

Interested lenders put in offers

Borrower accepts an offer

Borrower repays the loan

Borrower doesn't pay and lender forcloses the loan

Listing your NFT

Borrowers provide their NFTs (ERC-721 tokens) as security and get loan offers from our Lenders. In other words, as a Borrower you need to list your NFTs so that potential Lenders can see what assets you have and decide if they want to offer you a loan. You are under no obligation to accept any loan offers you receive.

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Borrowers lists their NFT on the platform

Lenders connect their wallet to the NFTfi platform, once this is done they can select which NFT they'd like to get a loan on.

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Connect your wallet

To use NFTfi you need to connect your Ethereum wallet to the NFTfi dApp. Connecting your wallet gives the dApp the ability to see your address (public key) and the corresponding NFTs. It does not automatically list your NFTs as collateral. You're in full control at each step of the way.

Customize your account (optional)

Many users have found it useful to list their Discord ID in their NFTfi account profile ("Account" on the top right) for easier Lender/Borrower coordination. We have an amazing community on Discord, where Borrowers and Lenders connect, form longer-term business relationships, discuss terms and learn from each other.

Set desired terms and list your NFT

Click the “Borrow” tab and find the asset you would like to list as collateral. Next, you have the opportunity to specify a preferred loan amount (wETH or DAI), interest rate (APR) and duration (days) as guidance for Lenders. You can also select to auto-accept offers that correspond to your preferences. Click “List as collateral”, sign the message (no gas!), and your NFT will be listed.

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Making a loan offer

Once an NFT has been listed, Lenders can make loan offers against them. As a Lender, your loan offers are binding, which means you cannot change your mind once a loan offer has been accepted by a Borrower. Once a loan offer is accepted, the loan is automatically executed.

Find an NFT to lend against

You can view all available NFT collateral by clicking on the “Lend” tab. Choose card view for a visual glance through the artworks, or use list view for powerful sorting capabilities. You can also filter by specific projects, or by keyword. Make sure you connect to the incredible NFTfi Lender community on Discord for advice on creating winning loan offers.

Borrowers lists their NFT on the platform

Lenders connect their wallet to the NFTfi platform, once this is done they can select which NFT they'd like to get a loan on.

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Submit a loan offer

Once you have found an NFT you want to make a loan offer on, you can review a list of existing loan offers in case the asset has any active ones. Add your preferred loan amount (wETH or DAI), interest rate (APR) and duration (days), and submit your offer (gasless!). You can modify or cancel an offer any time before it is accepted by Borrower. If your loan offer is not accepted it will expire automatically after 7 days.

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Starting a loan

Quite a few things happen simultaneously in a single transaction once a loan gets executed, to keep the NFT and loan amount secure at any point in time.

Choose a loan offer

As a Borrower you will be notified as soon as you receive a loan offer on your NFT. If you receive multiple loan offers you can choose the one you prefer from a list. You might, for instance, prefer a high loan amount with a high interest rate over a lower loan amount and a lower interest rate, or vice versa.

Execute the loan

Once you accept a loan offer, you trigger a transaction that creates a new loan contract, sends the NFT to the secure NFTfi escrow contract, transfers the loan amount from the Lender to the Borrower, and issues a NFTfi promissory note NFT to the Lender. Because these happen simultaneously, in a single transaction, there is no risk that an NFT will be sent to escrow without the Borrower receiving the funds.

Repaying a loan

Repaying a loan is as secure as starting one. A single transaction transfers the funds from the Borrower to the Lender, and returns the NFT from the escrow contract back to the Borrower.

Repay loan amount plus interest

Once a loan has started, both Borrowers and Lenders can view the days until a loan expires as well as the repayment amount at any time. As a Borrower, you also receive notifications from NFTfi close to the repayment due date. You will always have the full loan period to return the repayment amount (loan amount plus interest): there are no auto-liquidations on NFTfi and the lender can not foreclose before the loan due date.

Once the repayment is initiated by the Borrower, all of the following happen simultaneously in a single transaction: the loan amount plus interest is transferred out of the Borrower’s and into the Lender’s wallet (after deducting the platform fee of 5% on the loan interest), the Lender’s Promissory Note is burned, and the NFT collateral is transferred from the escrow contract back to the Borrower.

Note the following about repayments:

  • You can repay a loan early at any time, but you still pay the full interest amount (until we introduce pro-rata loans at a later point in time)
  • You can only repay the loan from the wallet you started the loan with
  • You can only repay the loan in one single repayment, i.e. not in tranches
  • Once a loan has been defaulted on, it cannot be repaid any longer (until we introduce renegotiations at a later point in time)
  • Once a lender has foreclosed the NFT of a defaulted loan, he becomes the sole owner and the loan can no longer be repaid through the NFTfi platform
  • Make sure you have both ETH and wETH in your wallet! You’ll use wETH to repay the loan, but you still want enough ETH to be able to pay for gas.

Foreclosure

Not everything in life goes as planned and sometimes  loans may not be repaid. In this case, the Lender can foreclose on the loan.

Foreclosing an overdue loan

If a loan is not repaid on time, in full, the loan becomes overdue and the Lender has the option to foreclose on the loan. Only overdue loans can be foreclosed. To foreclose a loan, the Lender clicks on “Foreclose loan” which triggers a transaction to transfer the NFT collateral out of the escrow contract and into the Lender’s wallet. The Lender’s promissory note is burned and the Borrower gets to keep the loan amount.

Find out more about foreclosure

Start your journey

Sign up today and start lending or borrowing using NFTfi.