Uniswap wants to financialize NFT

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Uniswap wants to establish itself as a leader in providing liquidity to NFT. The decentralized exchange said it negotiated with lending protocols to fund fast and profitable transactions with non-fungible tokens.
Decentralized cryptocurrency exchanger Uniswap is in talks with seven lending protocols that could become partners with the company to finance NFT liquidity. Uniswap’s head of non-fungible tokens, Scott Lewis, tweeted about it.

“Uniswap is the interface for all NFT liquidity,” he noted

According to his statement, it will be the exchange’s first step toward building NFT financialization to “solve for liquidity fragmentation and information asymmetry.” 

Financialization involves providing an adequate level of capital to the market for non-fungible tokens through lending. Liquidity fragmentation is the process whereby the ability to sell assets quickly is divided among other DEXes. Asymmetric information occurs when data are unequally distributed between the parties to a contract: one knows more, and the other knows less.

It is unknown which companies the prospects are being discussed with. After it became known that Uniswap is in talks with NFT lending protocols, Unlocked Finance, Liquid NFT, and Fuku also became interested in participating.

Community reaction

Users reacted to the news of Uniswap’s increased interest in NFT in two ways.

Some expressed understanding and approval of the announcement concerning the negotiations to lend to the sector of non-fungible tokens. Such community members see the decision as a way to strengthen the future of decentralized finance.

For example, a person with the nickname @shier_eth writes, “There is indeed a very serious information asymmetry, and users need a more concise interaction method to participate in the liquidation and auction of NFT assets.”

Still, others doubt Uniswap’s stated motives and the financialization of NFT, pointing out that the exchange simply wants to take advantage of liquidation profits.

Uniswap’s activity in the NFT sector

Uniswap is one of the largest decentralized cryptocurrency exchanges, with approximately $6 billion in the exchange’s liquidity pools. Recently, the company has been making more and more efforts to make NFT an integral part of its offering. Therefore, Uniswap is actively pursuing integrations and acquisitions of corresponding firms.

For example, DEX recently announced a partnership with Sudoswap, a decentralized NFT exchange, to provide efficient swaps. In addition, Uniswap bought NFT platform aggregator Genie. As representatives of the cryptocurrency exchange reported, the acquisition of Genie is aimed at transforming Uniswap into a comprehensive platform for users and developers of the WEB3 sphere.

DappRadar analysts believe that the convergence of Uniswap with NFT could lead to the emergence of a new kind of non-fungible tokens, which considers not only rarity and exclusivity, but also the practical financial benefit.

Recall that NFT lending services have recently attracted much attention amid fears of liquidating “blue chip” tokens on the cryptocurrency lending platform BendDAO.

According to preliminary reports, there is a risk of about $55 million being written off. Thus, BendDAO decided to lower the pledge liquidation threshold to 70% against 85% and reduce the auction period from 48 hours to 4 hours.