Ethereum: User Borrows $1.3 Million In ETH Using Mutant Ape NFTs as Collateral

• • Twitter user borrowed 1,000 ETH using the star-studded JPEGs as collateral today.
  • Twitter user fragment is the founder of NFT – ptm.

Twitter user Fragment, holder of a pair of Mutant Ape Yacht Club NFTs, borrowed 1,000 ETH which is around $1.3 million, using the star-studded JPEGs as collateral. DeFi lending has been in business overtime and there is a growing trend of borrowing against valuable NFTs and using them as collateral for loans.

1000 ETH was borrowed against two mega mutants today on @arcade_xyz! The payback is set to be 1,044 ETH in 90 days (18% APY). Additionally the borrower (@fragmentxyz) has bought a third mega mutant from @machibigbrother pic.twitter.com/0dkWIVOGYo

— 0xTIGΞR (@PltTiger) September 27, 2022

Gabe Frank, CEO of NFT lending company Arcade said;

It’s awesome to see these loans getting funded in this market climate, and more so that it’s happening all on-chain via DeFi.

Prices have stabilized some, and volatility has dropped, so lenders seem more willing to underwrite larger loans. At the same time, the mega mutants are incredibly rare assets.

Arcade facilitated the latest eye-popping loan which is a non-recourse loan. This means that the lender can seize the loan collateral incase of anything. The lenders on the other end of Fragment’s Mutant Ape loan are Nexo and Meta4 NFT Lending. According to Arcade, the loan repayment terms are 1,044 ETH in 90 days at an 18% APY.

In a statement by Frank, he further explained that;

If the borrower defaults, the lender has an on-chain claim to the collateral in the protocol. So the lender can claim the assets, unwrap it, and then sell it if they have to, or keep it on their balance sheets.

Twitter user Fragment, founder of a NFT called ptm, said;

We’re building IPs around [Mega Mutants], starting with @AppliedPrimate, so we’re looking to have more Megas to participate in our universe

The idea here was how do we get some cash fast to take advantage of an opportunity. Lending was the right call for what we needed. We will likely unwind the loan in the next 90 days or so.

In March, a holder of the NFT CryptoPunks, used their collection of 101 NFTs to borrow $8 million. In April, another CryptoPunks holder opted against an auction at Sotheby’s and instead borrowed $8.3 million in DAI using the bundle of 104 NFTs as collateral. Those borrowers facilitated the loans through NFTfi, an NFT-backed loan marketplace.

According to the NFT Arcade there has been an increase in NFT borrowing since June 2022, with a high of $2.5 million in September.