Why Limit Yourself To Trading NFTs When You Can Use Them To Generate Passive Yield?

The popularity of non-fungible tokens is growing like wildfire. The demand to add more utility features to these digital assets is also increasing as more people embrace blockchain startups and traditional businesses.

NFTs are still limited in utility, even though the NFT market cap has surpassed the $1 billion mark. Total 2021 sales topped $20 billion. OpenSea and Rarible are two examples of an NFT marketplace that allows users to trade, buy, and sell NFTs. However, there isnt much beyond these activities. If a user wishes to make additional income with their NFT, there are no existing platforms that offer this functionality.

NFTs are not covered by most of the DeFi services and products. There are not many platforms that offer loans against NFTs. NFTs are often left inactive because there arent many options to lend or stake them.

Drops created a unique model to help users earn yields from otherwise inefficient tokens. This platform provides an end-to-end platform to underwrite loans against NFT assets and DeFi assets. It allows users to access financing and generate returns from these valuable, but limited assets.

A promising alternative to Ethereum-based NFT marketplaces

Drops allows anyone to experience the full potential of NFTs with no intermediaries or complications. Drops uses lending pools that allow any asset to be used for collateral, including NFT collectibles and metaverse objects as well as financial NFTs or DeFi tokens.

The costs of Ethereum-based NFT markets have hit a wall. It is extremely expensive to mint, buy, sell, or send an NFT via any Ethereum-based platform. Sometimes, the gas fee is greater than the NFTs total value. This is due to the fact that most NFT marketplaces run on Ethereum.

Layer-2 scaling solution Polygon and Drops eliminates Ethereums slow transaction speeds as well as high gas fees. The platform also uses Biconomy’s dApp technology. This allows it to subsidize all transaction fees while allowing users to interact with it as though they were on the Ethereum mainnet. Drops combines the best of Polygon’s scaling capabilities with low fees, as well as the security and user-friendly features that Ethereum offers.

Enhancing the value proposition of NFTs by adding more utility

Drops provides multi-chain loans to NFT and DeFi assets and adds utility to NFTs. It also addresses the liquidity crisis in DeFi. Drops two main features set it apart from other NFT platforms are: (i) Converting NFTs into fungible ERC-20 tokens, supported by permissionless liquidity pools; and (ii), borrowing liquidity provider tokens and staking them in order to acquire additional tokens.

Drops allows you to borrow against NFTs or DeFi tokens that are sitting in your digital wallet. You can instantly get a trustless loan without the need to wait or speak with a lender, as long as DeFi tokens or NFT are available as collateral.

Drops has also launched Drops DAO, an enhanced liquidity platform built around Drops Loans protocol. Drops allows you to reap the rewards of your portfolio by providing stable coins and governance tokens for permissionless lending pools on the platform. This will allow you to earn attractive returns. Supported tokens users can provide liquidity and borrow from the pools to generate variable returns.

Drops is continuing to grow through partnerships and expansion. Chainlink Price Feeds have been integrated on Drops Ethereum mainnet. This allows for accurate and secure pricing of loans against various stablecoins or cryptocurrencies. Enjin partnered with the company to allow users to borrow their ERC-20 tokens against NFTs and in-game assets. Enjins technology replaces traditional banks or lending products such as credit cards. Polygon, Oraichain and Parsiq are some of the other significant partnerships.

Drops supports many NFTs including gaming, financial and collectibles. Drops is backed prominent venture firms and investors such as AU21 Capital and Axia8 Ventures. Bitscale Capital and Genblock Capital are also involved.

The Drops platform is an important addition to the NFT ecosystem as it expands. Drops adds value to NFTs otherwise lost to dust and helps it become the first NFT-focused project that successfully bridges the DeFi and NFT ecosystems. Drops permissionless borrowing and lending features make it possible to surpass existing peer-to–peer loan protocols like Stater and NFTfi.

Disclaimer: This article is intended for informational purposes only. This article is not intended to be used for legal, tax, investment or financial advice.

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https://cryptodaily.co.uk/2021/12/why-limit-yourself-to-trading-nfts-when-you-can-use-them-to-generate-passive-yield