DeFi is rocket fuel for NFTs

NFTs offer a high level of interoperability and act as representations of non-traditional assets.

This means that NFTs can be used in many areas. This includes video games, digital identity, licensing, certificates, or fine arts. These tokens can and even allow for fractional ownership of objects.

This is precisely where DeFi comes into play.

In all of the fields they are applied to, NFTs serve to represent some sort of value. The administration of these values can be done completely in the blockchain via smart contracts. This perfectly fits the definition of a DeFi project: a financial tool operating along the blockchain.

Present DeFi NFT offerings:

Existing developments in this area are already diverse.

For example, there are DeFi projects that describe themselves as a decentralized exchange for NFTs. One of the best known in this area is Drops. It is a new protocol that’s designed to leverage NFTs as collateral for loans. Designed with the future of financial NFTs in mind, Drops aims to optimize the utility of NFT assets to minimize their opportunity cost and maximize the returns of holding them.

Another example of the combination of NFTs and DeFi is Aavegotchi, which is a completely decentralized collection game.

Furthermore, Tinlake combines NFTs and Defi by offering a service that forms a bridge between real-world assets and DeFi. Its goal is to access bankless liquidity.

NFTfi is an additional player that stands out in this field. They offer a platform on which owners can lend their NFTs to other users.

These companies are already innovative and diverse. But, these are just a few of the many potential applications of these technologies. As described, the possibilities for combining DeFi and NFTs are far from exhausted.

An exciting future endeavor would be using DeFi and NFTs in in-game worlds or even for the administration of real assets such as land and houses.

Summary:

NFTs describe unique cryptographic tokens which are considered valuable because of their security and scarcity. In combination with decentralized financial products, unique financial services can be created using these tokens.

Potential use cases for this type of technological innovation include investments, liquidity mining, or in-game currencies. There are truly unlimited ideas for combining NFTs and DeFi-it remains to be seen which interesting projects will appear soon.