Rocket LP DAO, a loan provider using non-fungible tokens (NFTs) as collateral established four months ago, issued this week a $1,000 loan backed by just one Ethereum domain name — brantly.eth.
The loan was issued at a 15 percent interest rate for 90 days and is the first loan ever to be issued for collateral with only an Ethereum name service domain name.
Ownership of the ENS domain name, represented as an NFT, was temporarily conferred on Rocket as the loan issuer. NFTs are ERC-721 tokens created to represent a physical or digital asset in digital form.
The most prevalent use case revolves around tokenizing valuable asset ownership and can be transferred to another user through a smart contract.
More Info About The loan
The 90-day loan, worth 6.5 ETH ($1,000 at the time of issue), was given on Tuesday to Brantly Millegan, director of operations at ENS. While Millegan retains the ability to use the domain name during the loan term, Rocket does have authority over it. If the loan default is set, Rocket will retain ownership of the domain name and has the right to remove Millegan’s full access to it.
Although a domain name can generally be purchased for very little, Millegan explained in a Medium Post that: “Brantly is my first name and this particular ENS name has great personal value to me so I have a strong incentive to repay the loan.”
That raises the question of whether we can accurately tokenize sentiment or value it. Although the transaction is recorded on the blockchain, some users suggest that the valuation has been too high or has little correlation to an NFT. One user commented, “Might be worth 1/10th of that on the market.”
Among other new approaches, the cryptocurrency community continues to push the boundaries set by traditional financial systems, with multiple P2P lending opportunities. The MakerDAO has caused a stir in the recent market turmoil as it struggled to deal with the wild fluctuations and is now facing a $28 million lawsuit.