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Oli
Oli

Posted on

Would you lend or borrow an NFT to access its benefits instead of buying it?

Hi Community,

I'm working on a project that will allow you to lend and borrow an NFT - imagine borrowing FWB tokens from someone in order to access FWB's IRL social events in your city for a small fee rather than buying token at market rate. As the owner of the tokens, you make a passive income.

We've done some market research mostly amongst the crypto-curious and people new to the crypto space who have never owned a token and we got some positive feedback. Most of them expressed that they'd be happy to rent a bored ape and experience it because they couldn't afford to own one.

We've spoken to fewer owners and I assume most folks in this community own some NFTs. I would love to know if the concept of lending your crypto assets to make some passive income sounds appealing to you or if you already have other ways to make the most out of your crypto assets in addition to waiting for the value to increase.

Thank you in advance.

Top comments (9)

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chris profile image
Chris • Edited on

Hey Oli, I think the concept is fantastic personally. There is already some instances where this happens but its not as common at the moment. I guess the real question is what incentive do people have to rent PFP projects other than just wearing the avatar.

Pegaxy people rent horses from one another because they can't afford to buy for example, the owner gets a % of the profit and so does the renter.

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oli profile image
Oli Author

Hey Chris, great question. You're right, many of these PFP projects have no utility whatsoever. So we're starting with lesser known ones that have actual utility like IRL events and access to special features online. We've also been in touch with several projects in development that will incorporate better utility at launch.

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lee profile image
lee

I have a few nfts that I would defo loan out for some sort of tokenomics yield, I think the one that springs to mind the most is basis markets where the nft gives access to a trade engine that you have to have a good understanding of trading to use, loaning this out to someone and getting yield back on trades would be cool.

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oli profile image
Oli Author

Completely agree. This is something that I hadn't thought of until recently.

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ildi profile image
Ildi

I think this is a really interesting idea, especially if the NFTs that are being rented out have utility that will be valuable to the person paying to rent.

Most of them expressed that they'd be happy to rent a bored ape and experience it because they couldn't afford to own one.

I'd love to hear more about what value people see in paying to rent an NFT. What exactly hypes people about temporarily holding an Ape in their wallet?

imagine borrowing FWB tokens from someone in order to access FWB's IRL social events in your city for a small fee rather than buying token at market rate

This is a compelling reason for someone like me to want to rent FWB tokens. Im even more curious to see how the FWB team feels about people renting FWB tokens, is that something they are cool with and would encourage people to do?

The other big question that I would ask is, how secure is the smart contract that would be temporairly giving access to the person renting my NFTs? For NFTs that are not worth much, I guess this isnt a big deal but if I own an asset that is valued at $10k+ im gona need some really strong assurances that it is safe for me to rent it out. However crypto folks have an apetite for risk and experimentation so I dont think it will be a problem to get people to bite and give a try.

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oli profile image
Oli Author

Similar to FWB events, BAYC are planning on hosting IRL parties and people who can't afford to own one have expressed that they would love to rent one to experience the BAYC community even if temporarily.

FWB was an example I used because they're well-known and tend to create IRL events than other projects. but the goal is to partner up with projects like that in the near future. For a project, the rental listing gives them extra exposure and the renter could become an owner. We're also exploring other ways to incentives partner projects.

We're taking security pretty serious as custodian of people's crypto assets. I don't really want to reveal too much about how we're going about the security but we're going run robust testing and eventual audit the smart contracts.

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ildi profile image
Ildi

For a project, the rental listing gives them extra exposure and the renter could become an owner. We're also exploring other ways to incentives partner projects.

I guess this depends on the specific utility one will recieve when renting. Getting access to an event seems like a good fit for what you are describing but as a project I wouldn't want a bunch of temporary members to be floating in and out of our community because things can get confusing/messy. Maybe you can figure out a way to signal that "this member is a renter not an owner" and everyone can see that and is aware when interacting with that particular member (mostly referring to Discord servers as the community in this case).

We're taking security pretty serious as custodian of people's crypto assets. I don't really want to reveal too much about how we're going about the security but we're going run robust testing and eventual audit the smart contracts.

This will depend on the risk apetite of each NFT owner because as im sure you know, even audited smart contracts have been exploited. Maybe baking in insurance on top might increase the level of confidence someone will have when thinking about renting out their expensive NFTs.

Overall I think this is really interesting stuff and im intrigued to learn more so please do keep us updated!

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oli profile image
Oli Author

Thank you @ildi. Really appreciate your replies.

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ildi profile image
Ildi • Edited on

Read this article last night about Decentral Games casino that has made $7.5 million in revenue over the past three months. They do it all via Decentraland and have implemented a built-in delegation system, where players can loan an NFT wearable. I do like the game of poker but I am not fond of gambling in general, however I thought the article was interesting and relatable to this thread.