:eyes: NFT is allowed to be treated as collateral for financing ?

NFTs, short for non-fungible tokens, is definetely a hot topic throughout the years. NFTs are digital forms of art. This massive interest in NFTs allowed the market to grow swiftly in 2021. As a result, many expect this somewhat controversial blockchain-based form of art to thrive in the future.

Fortunately, Kraken is one of the entities out there that’s bullish on NFTs. The company wants to handle your NFTs in addition to your crypto holdings. And it’s considering a loan service that would rely on using NFTs as collateral. Kraken is now a popular crypto exchange which allow buy and sell of crypto to happen, adding this would appeal it to more customers.

In my opinion, NFT art can reach ridiculous prices online. The shortcoming is that many project or NFT art are not legit, and might be manipulated by the owner itself. For example, the creator can drive up the transaction price by processing transaction from two different wallets. Then, when the NFT art is delivered to another account, it is listed at a lower price then the prior transaction record, which is good enough to lure people into thinking there is a bargain on the said art, whoever takes on the last of it would might have a risk of unable to resell it at profitable range. But of course, not all NFT art has the same scenario.

Given now Kraken wanted to expose into NFT market that would let it offer new services to consumers, and Kraken wants to let NFT owners borrow money using their digital art as collateral. This would be a good thing to the overall NFT market, as now it has collaterised value as compared to before. With Kraken as pioneer to launch the financing service from NFT art, might induce more institutional adoption in the future, which would provide more value to the art itself.

To be honest, I find it interesting to see this news, I just curious how do they value the NFT, and prevent the downside risk of the collateralised NFT..