X2Y2 dives into NFT lending with 0% fees

by James · October 21, 2022

The competition in the NFT lending area is heating up

X2Y2, an NFT marketplace that had $143 million in trading volume in the past month, has launched a new feature for NFT loans. The project aims to attract users by not charging any fees.

Lenders can provide multiple loan offers with different durations to make better use of ETH. This is very different from existing lending platforms, where users have to bid with different accounts, which is not capital efficient.

“For example, you can make 3 loan offers each with a duration of 7, 14 and 30 days on the same spirit azuki for 50 ETH on X2Y2. While on other platforms you have to spread 150 ETH over 3 accounts to make the same offers,” the project said in a tweet that introduced the new feature.

Users will be able to provide both comprehensive loan offers and specific offers on NFTs with unique, sought-after properties.

Borrowers can use their NFTs as collateral to borrow ETH. After choosing a loan offer, their NFT is locked on the platform and they receive ETH from the lender. Borrowers must repay their loans before the due dates to avoid default and loss of NFTs.

Only select NFTs that have not been flagged as stolen on any marketplace are accepted as collateral. The current list of whitelisted NFT pools includes popular blue chips such as Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Azuki and Moonbirds.

As of October 21, the platform has 557 ETH ($724,100) in outstanding loans, while lenders have earned 12.78 ETH ($16,614) in interest.

Security firm SlowMist performed the security audit for the new feature.

X2Y2 faces an uphill battle if it is to compete with well-established NFT lending platforms such as NFTfi and BendDAO. NFTfi is the market leader with 275.54 million dollars in outstanding loans. Meanwhile, BendDAO is in second place with $153.26 million.

Rocky Start

In February, X2Y2 launched its NFT marketplace, along with its eponymous token. It received a mixed reception from the community due to its launch being marred by technical issues.

It has since recovered from its rocky start, with the platform enabling $142.68 million worth of trades in the past 30 days, according to DappRadar. There has also been a 36.33% increase in unique active wallets interacting with the platform’s smart contract over the period.

This success can be attributed to the platform changing its fee structure. In April, users could shop for free on the platform. Since then, the platform has started charging trading fees of 0.5%. This is much lower than the major marketplaces OpenSea and Magic Eden, which charge 2.5% and 2% respectively.

Last month, X2Y2 briefly made royalties optional on their platform, causing an uproar in the community. The marketplace was forced to reverse its decision. The X2Y2 token is down 3.3% in the last 7 days, according to CoinGecko.