How Does NiftyApes Work?
A quick overview of how lending and borrowing works on NiftyApes
NiftyApes is a protocol where Borrowers lock their non-fungible tokens (also known as NFTs or ERC-721s) as collateral in order to borrow fungible tokens like Ethereum's native token Ether and whitelisted ERC20 tokens like MakerDAO's DAI.
- 1.Lenders lock their tokens (Ether or DAI) into the protocol.
- 2.Next, lenders sign a meta-transaction containing the details of the loan offer. The offer includes...
- 1.The NFT collection (contract address) or specific assets (contract address + token number).
- 2.The amount of liquidity offered.
- 3.The interest rate
- 4.The duration of the loan in days.
- 5.An example offer looks like this
- 1.50 Ether, at 15% APR, for 120 days for any Bored Ape
- 3.Borrowers connect their wallet to the NiftyApes dApp and view the offers available against the NFTs they own.
- 4.Borrowers hit the "Money Button" which simultaneously escrows their collateral in the NiftyApes smart contract and transfers the liquidity in a single transaction.
What happens next is powered by the unique NiftyApes mechanism, "Harberger-Style Lending Auctions."
Lender 1 has a lot of capital, and they're comfortable with a modest LTV and a respectable APR on any Bored Ape. They set an open offer of 50Ξ for 90 days at 15% APR for all Bored Apes.
Lender 2, has less capital, higher risk tolerance, and a bullish thesis on Bored Apes with the 3d + Toga attribute, so they set a more aggressive offer on Bored Ape #6974.
Every offer is presented and executable in the NiftyApes offer-book, but the front-end will sort the most liquidity, at the cheapest APR, for the longest time first.
The owner of BAYC #6974 connects their wallet on the NiftyApes platform. They see the "Top Loan," the best offer based on NiftyApe's lightly opinionated front-end.
Instant liquidity for Borrowers, extremely flexible flexible mechanisms for lenders, & pricing data for the market