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Cryptocurrency exchange Kraken is reportedly developing its very own non-fungible token (NFT) marketplace. What’s more, users may also be able to borrow funds using their NFTs as collateral.
Exchanging Digital Art as Collateral
In an interview with Bloomberg, Kraken CEO and founder Jesse Powell revealed that the cryptocurrency exchange is launching a new non-fungible token (NFT) marketplace that may allow customers to use their non-fungible tokens (NFTs) as collateral for loans.
In addition to being just a buy-and-sell platform of various jpegs, the upcoming marketplace will also provide custody services, following in the footsteps of exchanges like Coinbase and FTX.
Referring to the CryptoPunk collection of 10,000 pixel-art images considered a groundbreaking project for NFTs, he said a single CryptoPunk could be used as collateral to borrow other cryptocurrencies or stablecoins.
“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.”
At the time of writing, CryptoPunk has a floor price of 66.9 Ether (ETH) or $273,673.
The exchange is currently working on determining the liquidation value of the digital art and collectibles before accepting them as collateral.
Powell believes that 2021 has been a big year for NFTs with the technology growing to become a mainstream entity. According to him, we are currently now in the second of three growth phases, beginning with speculation and growing to buying art and supporting artists. The next phase, he said would be for functional purposes which 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,” Powell added.
Kraken’s NFT marketplace could be up and running as early as February 2022.