DeFi and NFTs are often mentioned in the same breath. But much less often do they truly go together.
Decentralized leverage trading platform FODL is trying to change that. As it started exploring use cases such as accepting NFTs as collateral, it realized it could probably help its traders get a head start.
So it's giving away around $1 million worth of Bored Ape Kennel Club (BAKC) and Bored Ape Yacht Club (BAYC) NFTs. That's 24 BAKC NFTs and 1 BAYC NFT.
It's all part of a competition, in which FODL traders earn raffle tickets by staking at least 1,000 FODL tokens during the giveaway period, which runs February 14 until April 30. The platform will give out additional tickets to the top five traders on its platform every month and will also reward influencers who promote the platform on social media. After all 24 BAKC NFTs have been given away via drawing, the winner of the (mystery) BAYC NFT will be announced.
NFTs—unique tokens that signify ownership over digital assets—have made major waves in cryptocurrency and pop culture lately, with the BAYC NFTs boasting celebrity collectors like Paris Hilton, Eminem, and Steph Curry. The BAYC has spawned a few official offspring collections in the form of the BAKC and the Mutant Ape Yacht Club (MAYC).
BuzzFeed Outs Bored Ape Yacht Club Founders: Doxxing or Journalism?
Illustration by Mitchell Preffer for Decrypt Everyone knows about Bored Ape Yacht Club (BAYC), the collection of 10,000 ape avatars that have become the most prestigious—and most expensive—NFT collection out there. But what people didn't know was who exactly is behind BAYC. Until Friday, when BuzzFeed published an investigation revealing the identity of two of the four BAYC co-founders, who until now have been known simply by their ape personas, Gordon Goner and Gorgamel. It turns out these apes...
Currently, BAKC NFTs have an estimated minimum value, or floor price, of about 8.6 Ethereum or $27,000. BAYC NFTs have a floor price of about 100 ETH ($316,000).
NFTs represent one of the biggest subsectors within Ethereum, accounting for $25 billion in total sales volume last year. It's become just as important as DeFi, the set of blockchain-based protocols that allow people to swap assets, get loans, and even take on risk.
FODL knows something about risk. The decentralized platform allows users to make leveraged trades. In crypto and traditional finance, leverage is borrowed capital. On FODL, this means that traders can invest more money for potential gains by using debt—via a “flash loan" from AAVE or Compound—to increase the amount they’re trading with.
Flash loans are often used to take advantage of arbitrage situations, in which an asset is trading at different prices across platforms; it's a type of trade in which a large amount of money can be borrowed, used and repaid in the same transaction. In this case, the flash loan is used to gather additional leverage beyond the principal.
Bigger risks, but also potentially greater rewards. If things don't go a trader's way, they may start thinking about selling their NFT.
