Non-Fungible Tokens (NFTs) have taken over the web3 space. Their popularity is second to none, as web3 enthusiasts have created an industry that has taken the world by storm. Use-cases have shifted from purely digital art marketplaces to certificates and even yield earnings. Digital art still dominates NFT uses. That will change. The Decentralized Finance (DeFi) space has figured out that NFTs have many product use-cases within the industry.
NFTs get used as assets on several DeFi platforms. Before now, fungible tokens, stablecoins, and other digital assets reigned supreme. The entrée of NFTs has changed the game because of their unique nature.
Here are a few yield-earning NFT platforms that will rock 2022 and beyond.
Drops Offers Permissionless NFT Lending Pools And More
Recently launched NFT lending pool Drops has taken things up a notch and created permissionless lending pools. The basic idea behind Drops is to allow DeFi token and NFT holders to gain access to liquidity rather than for NFTs to sit idly in user wallets. Different NFTs used for collateral range from collectibles, gaming NFTs to financial NFTs. The NFT space goes through illiquid phases because of sales pressure. It has led to bubble-like behavior in the NFT space that occurs periodically.
As a result, many users get stuck with their NFTs without selling them at their desired timelines. Drops provides a way out for collectible and financial NFT owners by giving them access to permissionless yield pools where they offer their NFTs as collateral.
The great thing about this feature is there is no approval process required for getting access to the loans. The Drop token (DOP) enables governance within the Drop’s Decentralized Autonomous Organization (DAO). Access to the pool yields occurs once users connect to the DApp.
Izumi Finance Solves Issues With Uniswap’s V3 Finance NFTs
Izumi Finance, the multi-protocol programmable liquidity finance “Liquidity as a Service” (LaaS) platform, enables DeFi users to deposit their Uniswap LP NFTs on the Izumi protocol.
The Izumi Finance ecosystem enables liquidity mining from different chains and increases yield optimization. It allows users to increase the returns on their LP NFTs efficiently while allowing users the flexibility of earning on Uniswap v3. As the first protocol that supports Uniswap V3, Izumi Finance has taken the bull by the horns and created a new paradigm of operations for liquidity mining in the DeFi space.
Izumi Finance deploys the use of its iZi tokens to improve marketplace efficiency. By connecting providers (DeFi projects) with liquidity providers, Izumi Finance enables an environment where the ordered distribution of yields is available to liquidity providers. This approach, for LP NFTs, has raised the bar and created a new perspective on liquidity mining. Izumi Finance takes things to a whole new level and solves the problem of impermanent loss.
Uniswap V3 Allows Users to Stake LP NFTs
Uniswap V3 launched last year, but with a twist. Rather than allow users to deploy their DeFi tokens to gain yields, LP NFTs get minted, and yields get earned on each minted NFT. Users deploy the LP NFTs to access pools available within the Uniswap V3 D’App.
Although Uniswap V2 is still available, users piqued by the idea of having a yield-generating financial NFT have flocked to the platform and staked their Uniswap LP NFTs. As the cryptocurrency space increases in value and prices of Smart Contract capable blockchains like Ethereum rise, yields shall improve with efficient models gaining ground.
Will Yield-Earning NFTs Gain Adoption in 2022 and Beyond?
With a renewed interest in financial NFTs, many DeFi users wonder if yield-earning NFTs will become popular. Skeptics think these kinds of financial NFTs are complicated and present many problems.
Because of the unique nature of NFTs, the DeFi space will see new NFT platforms that offer yield generation at fair or even increased rates. The rarity of each NFT determines the value generated and the potential yields.
It shall become another niche product that produces higher yields as each unique circumstance governing every minted NFT determines the outcome yield-wise.
The new products made possible by these platforms will spur further adoption of web3 technologies. It is one more plus for the industry.