Facebook X (Twitter) LinkedIn Telegram
    • About
    • Advertise
    • Submit Press Release
    • Contact
    Facebook X (Twitter) LinkedIn Telegram
    BlockonomiBlockonomi
    • Prices
      • All Coins
      • Bitcoin Price
      • Ethereum Price
      • Ripple Price
      • EOS Price
      • Litecoin Price
      • Monero Price
      • Binance Coin Price
      • Bitcoin Cash Price
      • Chainlink Price
      • Cardano Price
      • Stellar Price
      • Tron Price
    • Sections
      • All
      • Analysis
      • Bitcoin
      • Ethereum
      • Education
      • Trading
      • Buying
      • DeFi
      • NFTs
      • Metaverse
      • Exchanges
      • Brokers
      • Guides
      • Gaming
      • Privacy
      • Business
      • Finance
      • Fintech
      • Regulation
      • Security
    • Claim Free Crypto!
    • Gamble With Crypto!
    • Easily Buy Crypto!
    Home / About / Advertise / Submit Press Release
    BlockonomiBlockonomi
    News NFTs

    A New Wrinkle for Ethereum DeFi: Loans Backed by Crypto Collectibles

    Rocket is a new kind of dApp that will allow DeFi users to receive undercollateralized Dai loans by putting up non-fungible tokens
    William M. PeasterBy William M. PeasterJanuary 21, 2020No Comments4 Mins Read
    Telegram Twitter LinkedIn WhatsApp Facebook Email
    Rocket NFT
    A New Wrinkle for Ethereum DeFi: Loans Backed by Crypto Collectibles
    Share
    Facebook Twitter LinkedIn Email Telegram WhatsApp

    The Ethereum decentralized finance arena is blooming fast in just about every direction. Some of its most interesting growth so far has come from the lending sector, with the fledgling success of the Maker project being a prime example.

    As intriguing as Maker is, its automated Dai lending system requires over-collateralization to work: users must lock up collateral like ether (ETH) or Brave Attention Token (BAT) to the tune of at least 150 percent of however much Dai they’d like to loan themselves.

    This collateralization ratio works well to protect the integrity of the Maker project. But this model isn’t feasible for average folks who don’t have spare capital to lock up against a loan, a reality that’s led some stakeholders around Ethereum devising how un- or undercollateralized loans could work in DeFi. And that’s exactly where the new Rocket project comes in.

    We Have Lift-Off

    Table of Contents

    • We Have Lift-Off
    • Why NFTs?
    • Building Up a Launchpad
    • A New Cryptonative

    Alex Masmejean, who helps with Operations at MetaCartel DAO and has been spearheading undercollateralized loan efforts around DeFi, formally introduced Rocket on January 20th.

    Thrilled to finally unveil @RocketNFT today on Ropsten!

    Pick your level ????

    Simple ????
    Apply for a loan by depositing NFTs.

    Cryptonative ????
    a #DeFi Dapp letting you borrow a stablecoin loan via a lending pool (the pool is a DAO that has an ETH reserve). ????https://t.co/YN5IGsb6mu

    — $ALEX Masmej (@AlexMasmej) January 20, 2020

    Now live on the Ropsten testnet, Rocket is a new kind of dApp that will allow DeFi users to receive undercollateralized Dai loans by putting up non-fungible tokens (NFTs), also known as crypto collectibles, as collateral.

    For example, think CryptoKitties, ENS Domains, Axie Infinity, Gods Unchained, SuperRare, and Decentraland tokens as among the varieties that Rocket, which will be organized like a decentralized autonomous organization (DAO) NFT bank, could accept.

    “Long gone are the days where you had to deposit more money in than you get money out,” Masmejean said.

    Why NFTs?

    In traditional finance, a person’s credit score might be enough to secure an uncollateralized loan. But since credit histories or related analogues have yet to be ported to DeFi, these aren’t actionable on Ethereum for now.

    For Rocket then, NFTs are one early way to provide such a scoring, or rather a workaround. The types of users Rocket is eyeing are more likely to have some crypto collectibles laying around as opposed to hundreds or thousands of dollars of ETH.

    Accordingly, these users can apply for undercollateralized loans through Rocket by putting up their tokens as stake. If defaults occur, the Rocket DAO can auction off the underlying collectibles to recuperate its losses.

    Moreover, Rocket’s proponents think it’s a prime time to be working around NFTs in general.

    “Apart from improving upon what the crypto industry calls ‘overcollaterization,’ a core assumption of Rocket is that the NFT market will explode in the next few years,” Masmejean said.

    Building Up a Launchpad

    Unlike Maker’s lending protocol, which is automated, Rocket’s DAO members will have the final say on which loan applications are approved.

    As such, these members pool their own money to a lending pool, with the idea being to gain above-average returns on any lent funds over time. As Masmejean has explained:

    “After careful due diligence, Rocket will query funds from our lending pool, which is a Moloch-based DAO dedicated to Liquidity Providers. The pool is in ETH to remain aligned with Ethereum future, and today is worth around $10,000 of potential loans to offer. Because of this, we don’t expect to accept loans for more than $4,000 in value … It’s riskier than lending DAI on classic #DeFi, but the goal is to have better returns.

    A New Cryptonative

    As DeFi continues to explode, new cryptonative profit opportunities will only continue to proliferate. Lending through Rocket is just the latest potential example.

    Consider CryptoKitties, for instance. Users could already “breed” their tokens together and sell the ensuing offspring on marketplaces like OpenSea.

    Rocket lets DeFi users who can stomach the risk offer liquidity-as-a-service to an underserved community, which is a new kind of opportunity altogether. More such innovations are coming as DeFi is collaboratively aimed toward escape velocity, too.

    Advertise Here
    William M. Peaster
    • Website
    • X (Twitter)
    • Instagram
    • LinkedIn

    William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

    Related Posts

    EOS Network – An Enterprise-Grade Blockchain Operating System

    November 29, 2023

    Wake: New Open-Source Tooling on Ethereum to Stop Bugs

    November 28, 2023

    Bitget Honors Core Community with Limited Edition NFT Drop

    November 21, 2023

    Comments are closed.

    Coinbase Earn
    Advertise Here
    Gambling
    • mBit Casino
      VisitReview
    • BC Game
      VisitReview
    • Duelbits
      VisitReview
    • BitcoinCasino
      VisitReview
    • FortuneJack
      VisitReview
    • 1xBit
      VisitReview
    Exchanges
    • KuCoin
      VisitReview
    • Coinbase
      VisitReview
    • Binance
      VisitReview
    • PrimeXBT
      VisitReview
    Koinly
    Advertise Here
    Trading Bots
    • 3Commas
      VisitReview
    • Cryptohopper
      VisitReview
    • CoinRule
      VisitReview
    3commas Trading Bot
    Advertise Here
    All content on Blockonomi.com is provided solely for informational purposes, and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, product, service or investment. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate.
    Blockonomi™ Copyright © 2017 - 2023 Kooc Media Ltd. All rights reserved. Registered Company No.05695741
    Network: Moneycheck - Finance News / Beanstalk - NFT & Metaverse News
    • About
    • Contact
    • Deals
    • Advertise
    • Privacy Policy
    • Terms & Conditions

    Type above and press Enter to search. Press Esc to cancel.