- A non-fungible token (NFT) collector loses collectible worth $ 340,000 for failing to service a $12,600 loan.
- The Elevated Deconstructions NFT now twice defaulted.
A collector lost NFTs worth over USD 300 thousand for failing to service a debt of around 3.5 ETH. The loan would have a value of $12,600 based on current rates. The said collector borrowed the funds from an NFTfi platform less than four months ago. To get that line of credit, the borrower used an “Elevated Deconstructions” NFT as a guarantee.
This token was part of the Art Blocks Curated set, selling for 11 ETH($39,600). However, its lowest selling price then was 3.25 ETH. This figure was lower than the loan’s actual value. However, there was a spike in these NFTs’ value before the loan’s repayment period had elapsed.
This spike was a result of its endorsement by famous collectors. These include Snoop Dogg’s pseudonymous Twitter account, Cozomo de’ Medici, an art collector, and Punk 6529( managed by CryptoPunk founder)
Reports show that this class of collateralized non-fungible token exchanged for 85 – 200 ETH and the valuation suggests that the digital collectible’s value had surged between $306,000 and $720,000. The collector couldn’t repay the credit extended to him within the contact’s time.
That left the loaner no choice but to seize the guarantee whose present value exceeds $300,000. The NFTfi platform, which had extended that line of credit, lost its 3.5 ETH. However, it gained the surety running into hundreds of thousands. Despite the development, the creditor can’t trade the collectible at that high floor price.
NFTs for a loan
Traders have begun borrowing funds through DeFi lending platforms. For that, they’re using non-fungible token as their bonds, and any collector can place a bond for a 10 ETH loan using an NFT worth 20 ETH. Defaulting on it would mean they forfeit their collateral.
For 18 days now, sales of Elevated Deconstructions NFTs have run to the ground. There’s speculation that the loanee decided to forgo the loan for instant liquidity. However, this theory doesn’t add up. They could’ve significantly adjusted its price downwards and exchange it for over 3.5 ETH still.
Interestingly two other loanees have used this Elevated Deconstructions NFT to seek credit. In both instances, the borrowers have, however, defaulted on their loans.
Reports indicate that the non-fungible token was security for a non-performing loan in April. That loan was for 3 ETH or $ 10 800. Later the previous owner obtained it before giving it up recently. Since the end of June, the token collector has been inactive, and blockchain records show that the wallet’s last transaction was almost 60 days ago.