In modern business use, the combination of DeFi and NFT has been serving as the most proficient tool for attracting loads of new consumers to the blockchain ecosystem. These brand-new technologies continue to generate umpteen variations. Especially in innovative services comprising investment, gaming, liquidity mining, fine arts, etc.
It is clear that NFTs provide high-end interoperability and represent non-traditional assets. This means that their area of utility is diverse and spread across all industries. From music and fine arts to video games and digital licensing, these non-fungible tokens can be used to own objects and carry a high value.
Now, this is precisely where DeFi comes into play. It ascertains the financial operation of these tokens along with the blockchain network.
What is NFT?
Non-fungible tokens are a digital asset that is unique and is not replaceable like, for example, bitcoin.
It adds a unique signature to the asset which distinctly makes it your own. The users can retain ownership of it and can monetize the right to own that object.
Decentralized Finance is a system that tenders financial products to its users utilizing a decentralized blockchain network. DeFi is present in almost every financial application on blockchain technology.
It is easy to use as it consists of applications and peer-to-peer protocols that have been developed on blockchain networks, which need no access rights for easy lending, borrowing, or trading of financial tools.
The Current State of NFT
The market for NFT is steadily increasing and achieving new heights as we see a surge in the market in the second quarter with $2.5 billion in sales so far, which was initially $13.7 million (first half of 2020).
Traditional investors might be skeptical about it still but the numbers are only going up as it is on its way to dominating the market. However, we are seeing a lot of traditional companies and brands putting their faith in NFT and thriving.
Why DeFi and NFT Go So Well Together?
More businesses tend to adopt modern technologies to combat the heavy consequences of the ongoing pandemic. The advent of NFT and the rise of DeFi NFT overlapping users could be considered a great boon for profit.
NFT is the spinach to the DeFi machine’s Popeye. It enhances the ingenuity of DeFi systems as the full value of the unique NFT assets unlocks and is realized by decentralized financing tools. These assets become more cost-effective as their liquidity is enhanced in the decentralized markets using smart contracts. Thus the combination of NFT and DeFi is successfully used in all industries outside gaming, such as entertainment, art, real-world assets, etc.
Active DeFi NFT Combined Projects
The number of overlapping NFT and DeFi projects in use and development is already massive. It is inclusive of many industries and business genres.
For example, some DeFi projects act as a decentralized exchange for NFTs or DEX. Some strive to achieve bankless liquidity by bridging the gap between virtual and physical assets. Such as the likes of Rarible, Aavegotchi, Tinlake, etc.
The potential projected by the innovative NFTs and DeFi combined offerings lay boundless possibilities in in-game worlds as well as real estate and fine arts. The union of NFT and DeFi uncovers the potential of the “tokens” and enhances their liquidity through fractionalization, led by DeFi protocols such as NFT20 and NFTX. In other words, you may now own a fraction of a high valued original piece of art as an investment and also gain legitimate bragging rights.
As all objects of value go digital, it’s high time we give digital asset exchange technologies the respect it deserves. Gone are the days where digital art would remain worthless as “anyone could download it.” Non Fungible Tokens when fused with DeFi magnify the financial utility of virtual assets such as digital art and virtual collectibles through fractionalization. It allows users to buy portions of digital assets which retain a high resale value. NFTs enabled by blockchain technologies that also facilitated the Crypto-boom, assure collectors and investors alike.
More online influencer heavyweights bring out their own NFTs. It’s not only the digital asset marketers and creators that are getting support, but the whole crypto-economy is receiving stimulation. DeFi NFT is the new age of finance and it is there to stay.