Image by Lanju Fotografie on Unsplash

NFTs meets DeFi explorations and usability

This article is a walk through NFT Standard, NFT characteristic traits and explanations, NFT utilisation in DeFi.

The standard

NFT key concepts lie in the ERC-721 and ERC-1155 standard which both have the ability to give a record of ownership to digital goods. The art file is being uploaded to a network which creates a metadata file that is being uploaded to the token data structure which is uploaded on blockchain.

Photo by CHUTTERSNAP on Unsplash

The infrastructure behind NFTs

Every file and NFT that is being uploaded to the blockchain needs to have cryptographic hash (unique fingerprint) in order to be uploaded on blockchain as metadata. This applies to NFTs as well to other files that can be found on the blockchain for example token data.The artwork file will most likely be uploaded to IPFS or to some other storage. IPFs which is a peer to peer protocol for storing and sharing data using Pinata file management.

Photo by José Martín Ramírez Carrasco on Unsplash

NFT characteristic traits and explanation

Layer of life by JUNG

NFT utilisation in DeFi

Overview of a few the most popular NFT use utilisation

Fractionalise NFT

By purchasing a higher value NFT owner can fractionalise the artwork which will allow users to hold a percentage of the artwork. This allows users who participated in the auction to buy a piece of the artwork they were auctioning but were priced out of. Fractionalising NFTs will allow NFT holders to see some liquidity from the NFT itself without selling it.

Take collateralized loan with NFT

NFT can cost a lot of $, you can collateralise your NFT as it is ERC721 token which can be collateralized and other users can offer you a loan in ETH. If you lend ETH or other crypto assets you get NFTs. Similar to other crypto loans, this works with NFT as well.

NFT Collateralized Loan on Aave

NFT Loans opens up a new way of looking at NFTs. Artworks are becoming a part of the DeFi. By locking up your NFT to the contract you can open a loan on Aave. Imagine it like conserving your NFT for competitive and instant loan on Aave. The price of the NFT is priced out based on the NFTX.

Liquidity NFT Market

Liquidity market on NFT gives the non fungible token attribute of a fungible token that allows user to trade NFT blue chips like Axie, Crypto Punks & Crypto Kitties on Uniswap. It is like a Coin Market Cap for NFTs where users can find liquidity and price related information like TVL, volume about the NFT blue chips. Adding oracles opens up a new way to variety of DeFi utilisation, now they are available to trade NFTs. Non Fungible tokens are getting the attributes of fungible tokens that makes them easier to trade the NFTs.

More to explore

Programmable NFT

Turn your NFT into almost anything you can imagine. Program the NFT to change itself when earning interest on it, add some sort of timelock to NFT that will release some data under customisable release conditions, make a donation to charity by transferring royalties of the NFT, do virtual geocaching by hiding the NFT in metaverse and let people find it, basket your collection of NFT and transfer them…The list goes on and on as the possibilities are almost unlimited.

Digital galleries and Metaverse

NFTs are being built mostly in the Open Source ecosystem where anyone can fork off the code and build their own application. This gives the opportunities for anyone to build a better way to display NFTs, put them into a work or collection. With the rising exposure of Metaveses and digital galleries, NFTs are a creative evolution that is already booming. The digital nature of the space already allows anyone to get their parcel at Cryptovoxels, Decentraland, Somnium, and create their own virtual gallery or upload it to Webaverse. The future is interacting with the world and art as well via VR and AR glasses. Keep an eye on KodaDot for more alpha leaks in Metaverse.

Ethereum Sunshine 🌞 Can do magic @EthMagicians ✨