NFT lending platform Nexo has issued a loan of around $3.3 million to an unknown NFT collector who used two rare zombie CryptoPunks as collateral. In successfully finalising the loan, Nexo stated in a press release that it’s the largest NFT-backed loan in history, which is quite possibly true given that a fellow high-profile NFT-backed loan in September (where the owner of 104 CryptoPunks wanted to take out a loan of over $8 million) was cancelled at the last minute.
The loan was issued on P2P NFT lending marketplace Arcase.xyz, with its completion coming through the transfer of 1,200 ETH to the recipient’s crypto wallet. The loan’s conditions stated that it must be paid back within 60 days, with annualised interest rate of 21%. In facilitating the loan, Lexo hedged its risks through investment manager Meta4 Capital.
Although the CryptoPunks’ floor price of just under 70 ETH may at first seem a little low with respect to the loan’s amount, the individual sales of the collection’s zombie variants have notoriously generated millions of dollars – such as September’s sale of Punk 6275 which cost NFT collector Pranksy $3.9 million.
Although hype, excitement, and opportunity are all legitimate takeaways from this landmark financial occasion (especially for those who own Blue-Chip NFTs), the NFT-backed loan represents a significant step in the sophistication of NFT financing, and the recognition of NFTs as valuable assets. Talk about utility.