Arcade, a peer-to-peer marketplace that offers users fixed-rate loans collateralized by their Ethereum-based NFTs, has been introduced on Pawn Protocol in an attempt to bring liquidity to the non-fungible token (NFT) market. Just a few weeks back, Arcade has also announced a $15 million Series A funding round that Pantera Capital led.
The Pawn Protocol is an infrastructure for NFT liquidity that enables the financialization of non-fungible assets. It comprises a set of smart contracts deployed on the Ethereum blockchain that helps trustless lending, borrowing, and escrow of NFT assets peer to peer.
A representative from Arcade shared with CoinDesk that the company has more than $15 million locked up in blue-chip NFTs and $6 million in loan volume, with average loans of about $350,000. Blue-chip NFTs are considered to be among the highest valued in the market, like CryptoPunks, Bored Ape Yacht Club, or Doodles. In spite of an overall market downturn in recent weeks, the floor price for projects like Bored Ape Yacht Club has soared to an all-time-highs, with record sales volume. “Right now, most of the value is locked up in the top 1% of assets, so the platform is curated to certain collections,” Arcade CEO Gabe Frank told CoinDesk in an interview. “Once we start integrating layer 2s and other blockchains, we can get into some of the lower value assets. Just because of gas costs, it’s currently quite restricted and only makes sense for these higher-value loans.” Frank also added that he sees the future of the NFT lending market as outspreading beyond just profile pictures. The platform has seen a growing appeal in collateralized loans for metaverse assets on games, and it recently issued a loan against 48 plots of the game’s virtual land, funded by Neon DAO. Pawnfi, a potential competitor of Arcade, has also raised $3 million in November.
