In its bid to bridge the gap between the traditional art market and new digital asset classes, lending startup NFT Arcade announced on Wednesday that it has raised $15 million in Series A funding for develop its platform in the financialization of high-value assets, non-fungible tokens, or NFTs.
Funding came from eight investment firms, including Pantera Capital, Castle Island Ventures and Franklin Templeton Blockchain Fund, as well as angel investors Zac Prince, CEO of BlockFi and Richard Ma, CEO of Quantstamp. Proceeds from the $15 million financing will go toward building the Arcade platform.
Founded in 2020, Arcade is an NFT marketplace for loans that independently assesses, validates and manages NFT collections and allows owners of high-value NFTs to use them as collateral for loans. Robert Masiello, co-founder of Arcade, said in an interview with ZDNet that the platform caters to both borrowers and lenders. “If you have high-value NFTs, you can borrow against fair value. We support about 45-50 different NFT collections, so it’s for NFTs that have some value against them,” he said. he declares.
On the other hand, Arcade allows people to become lenders, allowing those who want to lend capital to people looking to borrow against their assets. These transactions are carried out on a smart contract platform on the Ethereum blockchain, fully compatible with all ERC20 tokens, including wETH, USDC and DAI. “We are a non-custodial platform,” Masiello said. “We don’t have access to anyone’s assets or traded money. We take a service fee to provide this smart contract system, but it’s basically a non-custodial escrow platform on Ethereum .”
Over the past few months, Arcade has achieved a loan volume of around $3.5 million in the “private version”, but plans to open it to the public in January. Masiello noted that Arcade is only open to collectors of multimillion-dollar NFTs and institutional lenders, but also Decentralized Autonomous Organizations (DAOs) – a type of venture capital fund based on open source code. without a management structure or board of directors. . “We’ve had a mix of different voters and people using the platform on the lending side, and on the borrowing side, it’s mostly high-value NFT collectors who don’t want to sell their assets, but rather want to put them up for grabs. good use,” Masiello said. “They’re taking the proceeds of those loans and reinvesting them in NFTs, decentralized finance, and other forms of crypto and financial products without having to sell their assets.”
A unique feature of Arcade is its use of Wrapped NFT technology. This proprietary technology allows multiple NFT assets to be aggregated and used to acquire a single loan, enabling the acquisition of larger loans and greater liquidity. According to the company’s press release, Arcade will also allow developers to build on the platform, supporting the wider use of new digital asset classes.
NFTs are perhaps one of the most misunderstood digital assets to emerge in the blockchain space, as many struggle to define what they are. Simply put, they are unique units of metadata and identification codes that exist on a blockchain, like Ethereum, and cannot be replicated, like fiat currency or bitcoin. They usually come in the form of digital files such as photos, videos, computer-generated illustrations, and audio clips. These files can be “tokenized” so that they can be bought, sold or traded securely and, therefore, can be valued financially. In other words; many NFTs are the digital equivalent of a priceless work of art. Think DaVinci’s Mona Lisa. Although the Mona Lisa can be reproduced in different formats, there is only one real Mona Lisa.
But NFTs are more than just digital artwork. They can take the form of digital products, ranging from fashion and luxury brand collectibles to real estate and online games. Masiello notes that Arcade supports all NFTs, whether digital collectibles or in-game avatars. “I think the universe of what an NFT will be in the next five years everything can be an NFT or be associated with some kind of NFT, but the angle of art is very much related to people because they understand that art can be bought and sold and that it has this provenance associated with it. We allow a financial utility that previously existed for art, but now this universe for us of what could be borrowed and loaned is so much greater than just art This is for the whole token standard for NFT,” he said.
Arcade’s $15 million in funding may be a small initial step, but with the help of its financiers who see the potential expansion of the NFT market, it could be on the verge of a giant leap forward. a boundless digital economy. “We will continue to hire and strengthen the team,” Masiello said, noting that he and his 13-person team will continue to develop products, build the team and bolster marketing efforts. “We think Arcade will act as a portal to this financialization of the NFT concept, which will effectively support other types of products beyond just the peer-to-peer lending platform. We’re trying to make our platform as similar and as innovative as crypto leaders and companies, but with a focus on NFTs,” he said.