Keep your gaze fixed on non-fungible token (NFT) pawn shops.
Why it matters: For those holding NFTs that trade frequently and are considered more liquid, like those in the Bored Ape Yacht Club, CryptoPunks, or Pudgy Penguins collections, collateralized loans allow them to "hodl" and have coin on-hand.
Be smart: NFT holders have been weathering declining coin prices and falling prices by "freezing" portfolios, according to Chainalysis' market report.
Driving the news: Lenders are pivoting their strategy to either address the issue, or simply stay competitive.
Big picture: NFTs are less liquid than coins. Consider, for example, the oft-quoted reference metric "floor price" only represents the lowest price someone is willing to sell the NFT for, but not the lowest price at which someone would buy.
How it works: NFT lending protocols generally follow three models, with peer-to-peer the most common.
What they're saying: "Pricing protocols are getting better at pricing assets, but we’re not there yet. There’s not enough liquidity to base a lending decision on a specific trade," Gabe Frank, chief of NFT lending protocol Arcade, tells Axios.
Yes, but: Better mechanisms for price discovery are in development, whether they're appraisal games or price oracles.
Bottom line: NFTs are finding a new life, but in a different market.
