TL;DR Breakdown
- Kraken to offer loan services through its NFT market.
- Loan service is one of the many unique features of Kraken NFT market.
Top American crypto exchange platform Kraken recently announced that it would be floating its NFT marketplace in 2022.
In addition to that information, Kraken CEO Jesse Powell said the NFT department would also allow users to use their nonfungible tokens as collateral to access loans and enjoy other services.
Powell told Bloomberg News that Kraken plans to offer custody services for NFTs, as well as the ability to use NFTs as collateral for loans.
Powell called the functional use of NFTs, such as NFT-collateralized loans, “phase three” of the growing ecosystem for digital art and collectibles.
Phase one is speculation and phase two was buying art in a way that directly supported creators, according to Powell.
Loan- only one unique feature of Kraken NFT market
Kraken is not the only crypto exchange creating a marketplace to trade NFTs. Binance, FTX, Coinbase among others have all forayed into that aspect.
Powell explains, however, that Kraken NFT market will differ from others as it would allow users to leverage their NFTs to gain access to other services.
During his interview with Bloomberg, Powell said, “If you deposit a CryptoPunk on Kraken, we want to be able to reflect the value of that in your account. And if you want to borrow funds against that.”
Powell believes that the NFT space is still in its early days, and the utility of the NFTs will be the major focus next year.
NFT-backed loans are becoming popular within the cryptocurrency space. However, most services are offered by DeFi platforms, such as Arcade and Nexo, and Kraken is set to become the first centralized crypto exchange to adopt this model.
Kraken is one of the leading crypto exchanges in the world, and it has been expanding its services in recent months. Last week, Kraken listed AVAX, the native token of the Avalanche blockchain. The exchange also listed Shiba Inu and LUNA, Terra’s native token, in recent weeks.
