The loan has a 10-percent APR and a 30-day term.
An unknown borrower recently took out a $8 million loan collateralized by their collection of 101 CryptoPunks in what has been dubbed as the largest-ever NFT-backed loan.
The loan has a 10-percent APR and a 30-day term. It was made possible by MetaStreet's liquidity scaling solution on the peer-to-peer lending platform NFTfi.
Industry insiders regard the financing as a foreshadowing of the future of lending secured by digital collectibles – a market that is likely to increase as institutional interest in the sector grows.
Conor Moore, MetaStreet's co-founder and chief operational officer, told Blockworks that the loan is "orders of magnitude higher" than prior NFT (non-fungible token) funding. Last year, MetaStreet assisted in the completion of another record-breaking loan, this time a $1.42 million loan secured by an Autoglyph.
Moore did not reveal the identify of the borrower, whom he referred to as a "whale," or someone who possesses a huge amount of cryptocurrency.
MetaStreet, which employs eight people full-time, raised $3 million in seed funding and $11 million in initial protocol liquidity earlier this year. The company offers a layer of financial infrastructure to NFTs, specifically lending protocols like NFTfi and Arcade.
"It's similar to how Fannie Mae operates in the US home market." "You have a large aggregation vehicle through which originators can sell loans that are then batched up and split into multiple tranches," Moore explained. "These several tranches allow for greater capital efficiency."
NFT collectors, according to David Choi, co-founder and CEO of MetaStreet, want to free up wealth more quickly and do not want their cryptoassets to accumulate "virtual dust."
"I believe [NFT] borrowing markets will continue to expand, which means its purchasing power will rise," Choi said. "It's like, instead of putting all of your money into buying a house, you obtain a mortgage, which means you don't have to pay the other 90% until later." [With MetaStreet], I believe we are extending the industry's purchasing power."
