On Monday, 9th October 2022, creator of popular defi project aggregator DefiLlama, 0xngmi made an announcement on Twitter. The announcement noted the information about completion of LlamaLend. The project is the smart contract code written for the development of novel protocols focusing on borrowing and lending of nonfungible tokens.
The Llamalend GitHub page of the project noted a holder of any NFT or a digital collectible in need of money can now have the good opportunity in case of need of liquid money on the go using the platform.
The protocol specifically is focused on solving the issues which NFT holders have to face in order to raise liquidity while holding their holded digital collectibles. Primarily, the project targets the smaller size of non-fungible token collections.
LlamaLend up to Bringing New Opportunities
Users of Llamalend will be allowed to get a certain price in return of depositing their NFTs, according to the GitHub page. The price is said to be declared through the server itself and could be used to borrow Ethereum (ETH). The value for ETH to be borrowed is upto third part of the overall floor price of NFT.
As far as the repayment of the loan is concerned, the borrower can repay the loan back anytime. The interest over the loan would be charged only according to the time for which the loan was taken. Moreover, the interest would be fixed on the basis of utilization rate.
The DefiLlama developer noted there will be no built-in liquidation system over the pools on LlamaLend’s protocol. The liquidator, instead of the liquidation system, acts as the owner of the digital art collection. They authorize the power to decide the process to deal with the odd situation, for example a bad debt. More such examples could also include holding NFTs auction or extending the repayment plans within the procutol, etc.
However, 0xngmi also proposes a plan to charge an extra late fee which will be subjected to an increase linearly of the borrowed amount’s 100% after every 24 hours in order to mitigate the issue of repayments.
Additionally, the protocol is said to use an oracle system whereas the borrow price of NFT could be determined with a single request. The developer went on to explain that such an approach could turn out to be the highly cost effective one for the NFTs. Moreover, the NFTs having a very little amount of borrowing volume would not need to constantly update their on-chain prices.
It is worth mentioning that the NFT lending protocols have been through tough times recently given the situations like bear market and massive sell-offs. This resulted in elimination of a considerable amount of liquidity.
Source: https://www.thecoinrepublic.com/2022/10/11/defillama-developer-announced-launch-of-nft-lending-protocol/