Published on: 21/06/2022
NFT lending platform Astaria raises $8M in seed funding
Non-fungible token (NFT) lending platform and liquidity engine Astaria has announced it raised $8 million in seed funding. True Ventures, Arrington Capital, Ethereal Ventures, Wintermute, Genesis Trading, LedgerPrime, Hypersphere Ventures, and The LAO were among those who participated in the round.
Astaria is a platform that facilitates non-fungible token (NFT) loans. It allows users to put NFTs are collateral, giving them instant liquidity. Co-founder and CEO Justin Bram said NFT holders flocked the platform due to the current decrease in NFT sales, prompting NFT owners to look for passive income on their digital assets.
“We’re very bullish on NFTs and bringing real assets in the future,” Bram said, as quoted by CoinDesk. “Over the next three to five years our hope is that we will expand well beyond art-based NFTs and profile picture NFTs.”
By putting their NFTs as collateral, users can take out loans in the form of ether (ETH). Co-founder and Chief Technology Officer Joseph Delong, who previously worked at decentralized finance (DeFi) protocol Sushi as its CTO, said the platform planned to integrate more chains other than Ethereum, effectively allowing users to take out loans in other cryptocurrencies.
“We know Ethereum will be here in three, five years. We don’t know which other layer 1s [blockchains] will be. We don’t know which layer 2s [companion systems] will succeed,” Bram continued.
Astaria is not the first company to offer NFT lending services. NFT and Arcade are among the first to serve the NFT lending market. Astaria distinguished itself by not requiring two-way approvals, making transactions on the platform more efficient.
Bram said that the funding would be used to expand the company’s current eight-person team. He added that the platform would launch as early as September.
About NFT lending
There are four models of NFT lending, namely (1) peer-to-peer NFT lending, (2) peer-to-protocol NFT lending, (3) non-fungible debt positions, and (4) NFT rentals.
The most popular peer-to-peer NFT lending platform is NFTfi. Upon listing NFTS as collateral, users receive loan offers from others. After accepting the offer, the borrower will receive either wrapper ether (WETH) or DAI (a stablecoin) from the lending user’s wallet. The platform will then transfer the listed NFTs into a digital vault. The NFTs will be kept there for the duration of the loan.
The most popular platform that operates under the peer-to-protocol model is BendDAO. As of May 2022, the platform had around 1,000 NFTs listed as collateral. These included 273 Bored Ape Yacht Club NFTs.
MakerDAO is the most popular platform that uses the collateralized debt position (CDP) model. The platform allows borrowers to put ETH as collateral to take out DAI.
Lastly, the most popular platform for NFT renting is reNFT, which is a permissionless market that allows tenants to rent out their NFTs under their own rental terms and conditions. The rented NFTs are transferred from one wallet to another under a peer-to-peer renting model instead of using a digital vault to store them. A tenant is entitled to full access to token-gated features such as Discord servers and whitelist giveaways.