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In this article we are interviewing Matteo Cappola from FluidTokens, a project on Cardano working to unlock the use of NFTs as collateral for loans in a decentralized and peer-to-peer way.
In other words, users will be able to take out loans by placing their valuable NFTs in a smart contract and paying an interest to the lender, if they fail to repay the loan, the lender will receive the NFT put as collateral.
Cardano NFTs as collateral for lending
Hi Matteo, thanks for your time. Please introduce yourself and the team behind FluidTokens.
Hello everyone! I’m Matteo and I’m the CEO of FluidTokens. I’ve worked on several big projects in the Cardano ecosystem such as CNFT.io and Pavia.io, mainly as tech lead and DevOps engineer. I’m also a Cardano Smart Contract developer and a great believer in blockchain disruptive technology.
The rest of the team is also made by brilliant seasoned Cardano developers with a strong ethic and good reputation among the community. FluidTokens also has famous ambassadors that focus their content on education to help everyone in this new crypto experience.
What is FluidTokens, what problems does it solve and what are the risks involved in using an NFT as collateral?
FluidTokens is the Cardano peer-to-peer lending platform where anyone can borrow crypto tokens using NFTs as collateral for the loan. Everyone is also able to look at all existing loans and accept the best ones lending the required amount.
NFTs often store a huge value but they are very illiquid. The platform makes NFTs more efficient and a new part of the DeFi world, allowing owners to get additional liquidity for any financial strategy. Besides the typical DeFi risks, the lender accepts to provide crypto trusting the borrower who will have to repay the debt with the agreed interests. If the borrower doesn’t repay in time, the lender will be able to claim the NFT used as collateral.
For the lender it is very important to evaluate the risk of the loan and to check that the NFT is legitimate: the platform will provide several features to guide the user. An additional risk is that the NFT value may drop suddenly for external factors, so it’s important to accept loans with reasonable expiration dates.
Why have you chosen the Cardano blockchain for your project? What advantages does it have over competitors?
We’ve been developing on Cardano for more than 2 years and we know very well the advantages and disadvantages of this blockchain. The eUTXO model and the use of Haskell in Smart Contracts allow an additional security layer that is very important for DeFi protocols such as FluidTokens.
The Cardano scaling updates planned for this year will also fully unlock the beauty of this blockchain. For NFTs there’s an additional advantage: in Cardano, NFTs are not variables contained in a smart contract: they are actual tokens that live in your wallet and they don’t depend on any particular Smart Contract.
Can you expand on your partnership with COTI? And for those who don’t know, can you explain what COTI is and its relationship with Cardano?
We recently partnered with COTI to support Djed, their upcoming stablecoin. Loans will be easier to manage for many professional DeFi actors when they will be created and accepted using crypto assets that don’t fluctuate too much in value during the loan.
COTI is the first enterprise-grade fintech platform that empowers organisations to build their own payment solution and digitise any currency to save time and money. We’re planning additional DeFi mechanisms with COTI that will leverage upcoming FluidTokens functionalities.
Where do you envision FluidTokens in a couple of years? What would success look like in your eyes?
We believe that many NFTs will keep their high values thanks to several factors such as community support, interesting utilities and the metaverse, so our platform will be the leading lending protocol for optimising the portfolios of NFT holders.
I will personally consider FluidTokens a success when all the long-term planned features will be fully implemented, when the DAO will lead the updates to the platform and when many other DeFi components will leverage FluidTokens to compose incredibly optimised financial strategies. Metaverse integration is also an important step that we’re currently investigating to enhance NFTs functionalities inside the virtual worlds.
Great, any final words? Where can our readers find you?
We’re very excited to be pioneers of this new financial paradigm, giving an additional strong utility to any NFT on Cardano. The feedback from the community has already been super positive.
To follow our latest news and features please check out our Twitter and feel free to join our very active community on Discord. We plan token airdrops for the members based on the actual knowledge of the platform!