Kraken’s New NFT Marketplace to Issue Loans

Kraken’s New NFT Marketplace to Issue Loans
Photo by Daniel Thomas / Unsplash

According to Jesse Powell, by 2022, the newly-created exchange will become a marketplace for nonfungible tokens and NFT-backed loans. In a recent interview with Bloomberg News, Kraken co-founder and CEO Jesse Powell said that the crypto exchange would create a nonfungible token (NFT) marketplace to allow users to borrow dollars against their NFTs.

Powell stated that the company intends to join the NFT industry in early 2022 and hopes to provide a function that will allow users to calculate an NFT's liquidation value and whether it can be used as collateral for a loan.

"If you deposit a CryptoPunk on Kraken, we want to be able to reflect the value of that in your account," said Powell, continuing, "and if you want to borrow funds against that."

However, the value of NFTs varies widely, and only a small minority of token owners own a digital collectible worth as much as a CryptoPunk, which has a floor price of 66.9 Ether (ETH) or $273,673 at the time of publication.

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NFT utility, according to Powell, will explode in 2022:

"Phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs."

Kraken has bought Staked, an infrastructure platform that allows for non-custodial crypto staking to attract new investors. As a result, clients of Kraken can now receive cryptocurrency incentives and yield while maintaining ownership over their digital assets.

Launched in 2011, Kraken, according to CoinMarketCap data, has grown to become one of the largest cryptocurrency exchanges in the world, ranking among the top in terms of average liquidity, volume, and digital asset reserves.

As additional DeFi platforms, such as Arcade and Nexo, provide this new lending model, Kraken's announcement highlights how NFT-backed loans are becoming more frequent. Arcade secured a $15 million investment round in December, according to Cointelegraph, as part of a larger push to expand its offerings and entice additional investors to its surety-based NFT platform.

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