Is NFT Lending Good Or Bad?

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What's Dropping ⚡️

• Samsung signs a deal with multiple Web 3 projects, with a vision to develop their NFT ecosystem. (CoinGeek)

• Crypto enthusiasts in Canada are now limited to an annual buy limit of $30k worth of SOL annually. ETH and BTC are exempt. (Cointelegraph)

• ETH developers debunk common misconceptions regarding the upcoming merge. (Ethereum)

• A new sports NFT platform NFL All Day has just opened to the public after seven months in beta. (Decrypt)

• Steamers and YouTubers are starting to create NFTs in tandem with PlayNFT, which acts as the missing link between gaming content and utility for streaming fans. (Playnft.io)

• It's not uncommon to get meaningful lyrics tattooed, and Kobalt is taking that lyrical ownership to the next level with Direct-to-Fan NFTs. (Kobalt)

• SOL Phantom Wallet has integrated a measure that burns stolen NFTs upon being sent to users' wallets, lowering the risk of scams. (@phantom)

• Magic Eden takes responsibility for Degen town, strengthens Launchpad vetting criteria and moves 100% of the funds raised from Degen Town to create a scholarship program for NFT artists & creators. (@Magiceden)

• yOOts team confirms they’ve accepted the first wave of yOOts scholarships (@frankdegods)

BendDAO NFT Lending Causing Concern 🧐

Over the coming weeks, we are going to see liquidations happen in the NFT market, caused by taking out loans for collateral. All of this is because of a service called BendDAO.

BendDAO allows an individual to take out a loan on their NFT. For example, if the floor of the Bored Ape Yacht Club was 100ETH, you can take out approximately 30-40% of the floor price as a loan. But, the kicker is that your “health” factor needs to remain below 1.

Borrowers have a 48-hour protection policy where they are able to buy back their assets. After that, the NFT is put up for auction to the highest bidder. Why is this a problem? There are currently 272 Bored Apes that have loans on them. Along with other blue-chip collections, if these liquidations were to commence, this would crash the NFT market past what it’s already at due to the predatory nature of auctions.

Throughout the past year, we have seen a plethora of third-party services being introduced to the NFT market. While those services don’t appeal to the masses, they show that even blue-chip holders are looking for ways to monetize their NFTs, on top of the utility that the projects’ ecosystems are already providing to them. Hopefully, these loans will be repaid in a timely manner. If not, an exodus may be looming ahead. WAGMI.

United Nations Assault On Crypto 😒

The United Nations is taking some major shots at crypto. Between June and August, the U.N.’s Conference on Trade and Development published three briefs making different arguments for why crypto poses a fundamental threat to developing nations. The first brief is basically trying to figure out why people so rapidly adapted crypto - and its explanation is that digital payment systems made transferring money to family abroad easy and that people bought crypto to hedge against the risks of inflation and currency insecurity. It then goes on to say that if people take on crypto, they will do so at the expense of the national currency’s stability and that this will pose an existential threat to the developing country. The second brief focuses on the security and stability risks that crypto poses and the third brief emphasizes how crypto can be used to do illegal things like avoiding taxes.

The U.N. ends up showing its hand in the policy regulation segment of each of these briefs. In other words, all of its policy recommendations ask developing nations to aggressively centralize the decentralized terrain, create systems to constantly surveil crypto users, create an alternative national digital payment system so that people don't resort to crypto, and prohibit the advertising of crypto in public spaces and social media. It would seem that U.N.’s answer to people finding freedom and ability through a decentralized infrastructure is to centralize that infrastructure as quickly as possible. If those three briefs weren’t enough of an assault on crypto, the U.N’s executive director of drugs and crime Ghada Waly went on stage during the World Economic Forum just yesterday to center a conversation on ways that crypto is used illegally.

Phantom Wallet Fights NFT Spam ⚔️

As Web3 is still in transit to where it ought to be, the ecosystem has seen obstacles on its way to mass adoption. Creating solutions or ideas to help break out of this chasm or obstacles is what keeps the ecosystem growing. The growth comes with the popularity of one of its underlying technologies -NFTs.

This technology has opened a widespread method of attack for bad actors(scammers) through spam NFTs. Phantom wallet has come up with solutions to this problem for its users.

The phantom team explained why spam NFTs are a problem and their effort to protect and give users more control over the contents of their wallets:

“Spam is a hard problem to solve. Bad actors are taking advantage of Solana’s low transaction fees to exploit iconic mechanics of web3, such as NFT airdrops.”

To remove unwanted wallet spam, simply select the NFT you want to burn in the Collectables Tab and select the Burn Token function located in the top-right ellipsis menu. Once an NFT is burned, the token is permanently removed from the wallet and you receive a small deposit of SOL that serves as the "rent" used to pay for storage.

They’re collaborating with Blowfish to introduce improvements on how to alert users to phishing attempts as a phishing warning system could be another way to fight against spam NFTs. Read more on phantom’s blog post here.

Meme Drop 💧

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Disclaimer: The Drop DOES NOT provide financial advice. All content is for informational purposes only. The Drop is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any crypto-related asset is extremely risky and could result in significant capital losses.

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Gannon Breslin, Kayla Kilbride, CryptoVonDoom, Naveed Lalani, Alex Reed, Naman Patel, Big Tuna

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