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Current NFT financialization practices are along five verticals: NFT aggregation, fractionalization, lending, pricing, and rental.
Decentralized exchange, Uniswap, has announced it is in talks with seven lending protocols as a first step to improving NFT financialization. Head of NFT product, Scott Lewis, announced via his Twitter handle.
Lewis noted the exchange will work with each protocol to improve information asymmetry and liquidity fragmentation. Information asymmetry and liquidity fragmentation undergird the liquidity problems of the NFT industry. While the industry has experienced tremendous growth, it is still relatively illiquid.
In 2021 alone, about $23 billion worth of NFT trades occurred. Despite the level of liquidity in the industry, much of it is inaccessible- not immediately. NFT financialization aims to improve liquidity in the NFT space.
Solving Liquidity Problems with NFT Financialization
Current NFT financialization practices are along five verticals: NFT aggregation, fractionalization, lending, pricing, and rental. In recent months, Uniswap has been wading into the NFT space guaranteeing a different type of financial utility.
According to DappRadar, “this is exciting news in a tough bear market.” DappRadar noted:
“Uniswap´s move into NFT could usher in a new kind of NFT that does not only rely on rarity factors and exclusivity
In 2019, Uniswap launched Unisocks, a limited edition NFT backed by real-world assets. Also, in May 2021, the exchange announced that its liquidity pool positions would become NFTs on Uniswap v3. More recently, Uniswap acquired Genie, an NFT marketplace aggregator. Following the integration with Genie, Uniswap users can buy and sell NFTs across different marketplaces.
Later in July, the exchange announced an integration with the decentralized NFT marketplace, Sudoswap. to improve the efficiency of NFT swaps. The discussion with the lending protocols is the most recent of its moves.
Community, Market Reacts to Announcement
While the lending protocols remain unnamed, the community has responded favorably to Uniswap’s foray into the NFT space. One user, Shier, affirms the information asymmetry in the industry. Shier tweeted:
“Users need a more concise interaction method to participate in the liquidation and auction of NFT assets.”
Other NFT platforms like Fuku, Liquid NFTs, and Unlockd_Finance have also expressed their interest in discussing with Uniswap. At the time of writing, Uniswap’s native token UNI was trading at $7.08, up 0.91% in 24 hours.