Kraken founder and CEO Jesse Powell recently shared in an interview with Bloomberg News that the exchange will launch an NFT marketplace that will allow users to borrow money against their NFTs.
New loan model with NFTs
Powell explained that the company plans to enter the NFT space in early 2022. It hopes to add a feature to determine the liquidation value of an NFT and whether it can be used as collateral for a loan.
“If you put a CryptoPunk on Kraken, we want to be able to display its value in your account. You can also borrow money with it.” According to Powell.
However, the value of NFTs differs greatly from one another. Only a small percentage of token owners own a digital collectible worth as much as a CryptoPunk. Out of these, the lowest price is 66.9 ETH or $273,673 right now.
According to Powell, the feature will explode next year:
“Phase one was speculation, phase two is buying art and supporting artists, phase three will be functional use of NFTs.”
Additionally, Kraken recently acquired Staked in an effort to attract new investors. Staked is an infrastructure platform that enables non-custodial crypto staking. Kraken customers can now earn crypto rewards and returns while maintaining control of their digital assets.
Founded in 2011, Kraken has grown into one of the largest crypto exchanges in the world, according to data from CoinMarketCap.
Kraken’s announcement shows how NFT-backed loans are becoming more and more common. More and more DeFi platforms, such as Arcade and Nexo, are both offering this new loaner model. Arcade closed a $15 million financing round in December as part of a larger plan to increase its offerings. It also wanted to attract more investors for its collateral NFT platform.