- A crypto borrower has had to give up his now $340K Elevated Deconstructions NFT as collateral for a $12K loan.
- The NFT’s value surged from $39K after receiving an endorsement from popular crypto enthusiasts Punk 6529 and Cozomo de’ Medici.
In a rather interesting twist of events, a crypto lender is now $340,000 richer after one borrower failed to repay his $12,000 NFT-backed loan.
Three months ago, one NFT collector decided to use his “Elevated Deconstructions” NFT as collateral on the DeFi lending platform, NFTfi. He acquired a loan of 3.5 ETH, which as of this writing, was worth about $12,134 going by our price data.
Of note, the borrower’s NFT is part of the “Art Blocks Curated” set. At the time of the agreement, it was selling for just 11 ETH ($39,600). However, shortly after, the value of the NFT collection shot up to 85-200 ETH ($306,000 – $720,000), as popular NFT collectors endorsed it. The collectors were Punk 6529 – a Twitter account run by the owner of CryptoPunks and Cozomo de’ Medici – a Twitter account claimed by rapper Snoop Dogg.
Yesterday, the loan tenure expired, but the borrower was unable to pay up his due. The lending platform gained ownership of the now over $300,000 NFT, after losing just $12,000.
NFT crypto loss due to loan default
Nonetheless, the current owner of the NFT may be unable to sell it immediately for the amount it is currently worth. The last Elevated Deconstructions NFT was sold 18 days ago, indicating low frenzy-driven demand despite endorsement by famed individuals. The borrower may have chosen to give the collectible up for quick liquidity.
More interestingly, this is the second time the Elevated Deconstructions NFT has been put up as loan collateral. On both occasions, borrowers have lost it to the lenders following a loan default. The initial owner of the NFT gave it up after failing to repay a 3 ETH ($10,800) loan in April. This is how the NFT.fi borrower obtained it before losing it over the weekend.
The NFT.fi borrower has been part of a number of NFT-backed loans. In April, he received an Arago NFT after the grace period of a 3 ETH loan lapsed. Later in May, he received 1 ETH, inclusive of the principal and interest, for a loan he gave out with the collateral as a Decentraland parcel of land. However, the lender/borrower has not been active for 58 days, according to Etherscan blockchain records.
All in all, the story depicts how potentially profitable NFTs are, with huge inspiration rising from Beeple’s $69M artwork. Last month, a 12-year old boy made $400,000 selling his self-made “Weird Whales” NFTs. The perceived value of these collectibles varies, with seemingly simple depictions going for hundreds of thousands and even millions. Earlier this year, a funny video dubbed “Charlie bit my finger” auctioned as an NFT for a whopping $760,000.