Kraken founder and CEO Jesse Powell recently shared in an interview with Bloomberg News that the cryptocurrency exchange will launch a non-fungible token (NFT) market that will allow users to borrow against their NFTs.
Powell explained that the company plans to enter the NFT space in early 2022 and hopes to add the function to determine the liquidation value of an NFT and whether it can be placed as collateral for a loan.
“If you deposit a cryptocurrency with Kraken, we want to be able to reflect the value of that in your account,” Powell said. “And if you want to ask for a loan against that.”
The value of NFTs, however, is across the spectrum and only a small percentage of token owners have a digital collectible valued for as much as a CryptoPunk, whose minimum price is 66.9 Ether (ETH) or USD 273,673 per writing time.
According to Powell, the usefulness of NFTs will explode next year:
“Phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs.”
What’s more, Kraken recently acquired Staked, an infrastructure platform that allows non-custodial cryptocurrency bets to be placed, in an effort to attract new investors. Kraken clients will now be able to earn crypto rewards and returns while maintaining control over their digital assets.
Kraken was founded in 2011 and has grown into one of the world’s largest cryptocurrency exchanges, ranking among the top in terms of average liquidity, volume and reserves of digital assets, according to data from CoinMarketCap.
Kraken’s announcement demonstrates how NFT-backed loans are becoming more common as more DeFi platforms, such as Arcade and Nexo, are offering this new loan model. As Cointelegraph recently reported, Arcade closed a $ 15 million funding round in December as part of a broader effort to increase its offering and attract more investors to its collateralized NFT platform.
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