Genesis Global Capital has completed one of its first purely NFT-backed loans for USD 6 million to Meta4 Capital, a Miami-based Web3-focused investment management firm. This loan is notable not only for its amount, but for using only non-fungible tokens (NFTs) as collateral rather than including a broader liquid collateral. Meta4 operates as an NFT VC backed by Andreessen Horowitz, specializing in the acquisition of allegedly rare and historically significant NFTs.
Proceeds from the Genesis loan were used to finalize Meta4’s purchase of three NFTs that were part of Sotheby’s October NFT “Natively Digital” auction: the Bored Ape Yacht Club # 8817 in gold, for $ 3.4 million; the Rare Pepe PEPENOPOULOS, of USD 3.6 million; and an NFT from Mitchell F. Chan of FingerprintDAO of $ 1.5 million. These acquisitions acted as bridge capital until Meta4 closed a Series B round on December 1 for an undisclosed amount. All Meta4 investors received a proportional share of each item purchased.
Brandon Buchanan, CEO and co-founder of Meta4 Capital, told Cointelegraph that NFT-backed loans provide a better way to manage the risk of the underlying asset, typically Ether (ETH).
“NFTs, which would otherwise be in a mostly static state, now have another function and we are able to financially engineer above-interest returns for our investors, either by purchasing additional NFTs or by earning returns through DeFi protocols. “
Buchanan also expressed “excitement” about partnering with a broker like Genesis, which provides “credibility” and value to NFTs and NFT-backed loans.
The Vice President of Institutional Lending for Genesis, Roshun Patel told Cointelegraph that the company is accepting what is considered “top-notch” NFT for now.
“We are looking for the most liquid and high individual value NFTs. Right now, only a few CryptoPunks and Bored Apes fit into that category, as well as some NFTs from Pak and Nouns, “he said.
NFTs as a novel form of collateral are being spearheaded by native cryptocurrency companies and protocols. The loan between Genesis and Meta4 Capital advances the growth of financial products for institutional investors in the NFT asset class.
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