Published on Jan 25, 2023

DeFrag — Get an Instant Loan for your NFTs

Author: Kaushal
#Insights
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DeFrag — Get an Instant Loan for your NFTs

DeFrag is an NFT lending protocol launched on Arbitrum and focused on gaming NFTs within the TreasureDAO ecosystem.

DeFrag makes borrowing easy, you deposit NFTs → Borrow USDC → Repay anytime.

DeFrag’s Mission is to empower users with financial tools and education to increase their ability to extract value from their digital assets.

Stats (As of 1/23/2023)

TVL - $210,881

Cumulative Borrowed Amount - $37,591

Available Liquidity - $244,563

Number of NFTs Collateralized - 65

How To Borrow Guide

  1. Go to defrag.fi
  2. Click Enter DeFrag
  3. Select Collection
  4. Approve your NFT(s) - Confirm transaction via Metamask
  5. Enter USDC amount you’d like to borrow - Confirm the transaction via Metamask


Available Collections

  • Legion Genesis
  • Smol Brains

Problem

Borrowing against NFT assets is hard.

  • Inefficient peer-to-peer models and lack of available liquidity pools for instant loans
  • Bad UI - difficult to use NFT lending protocols
  • Nascent infrastructure for price discovery in the form of bids or sales
  • Lack of use cases or utility for standard PFP NFTs - total unique borrowers for all NFT lending protocol on L1 is 4,560

Solution

DeFrag makes it easy to deposit NFTs → Borrow USDC → Repay anytime.

  • DeFrag utilises a peer-to-pool model where borrowers tap into liquidity provided by underwriters earning APR fees.
  • Easy to use UI, deposit NFTs → Borrow USDC → Repay anytime.
  • NFT liquidity infrastructure - Aggregators, marketplaces, NFT AMMs, NFT trading & analytics platforms are all being developed.
  • We are seeing growing activity within the TreasureDAO ecosystem on the Arbitrum Network which has 2 million active accounts.

TreasureDAO

Jan 2022 - 16,000 $MAGIC users

Jan 2023 - 375,000+ $MAGIC users

2200% User Growth Year over Year

Our Thesis

Gaming and derivatives activity is moving to EVM compatible layer 2s along with NFTs. The reason is simple gas costs and a common developer language, solidity.

How does it work?

Instant NFT loans through our peer-to-pool model utilizing the Black Scholes Model.

For more details visit our Protocol Overview page.

Why TreasureDAO?

TreasureDAO’s focus on gaming has given rise to a far more active community of NFT holders creating an explosion of use-cases where lending can be used.

There are 2 gaming ecosystems currently integrated into the DeFrag lending protocol.

Bridgeworld - a game of strategic commerce, trade and domination which sits at the center of the Treasure metaverse.

Collections

  • Genesis Legion (Common Rarity)
  • Genesis Legion (Special Rarity)

Smolverse - a fun and playful NFT project and community built on Arbitrum L2.

Collections

  • Smol Brains
  • 1/1 Smol Brains

Current Possibilities

DeFrag borrowers use their USDC loans to enter other gaming ecosystems.

For example

  1. Borrow 200 USDC against your Smol Brain NFT.
  2. Swap USDC loan to MAGIC tokens.
  3. Purchase Tales of Elleria Hero.

This way, owners of Smol Brain NFTs are able to participate in both Smolverse and Tales of Elleria games.

Future Possibilities

DeFrag will enable users to obtain TreasureDAO NFTs without having full liquidity to do so.

Suppose a Genesis Legion NFT has an asking price of around $1000, and the user has only $800. DeFrag will perform the following steps to make it happen:

  1. Give a flash loan of $200 to the purchaser.
  2. Use the credit to buy Genesis Legion.
  3. Collateralize on DeFrag to generate a $200 loan to repay the flash loan.

As a result, the user would have obtained the Genesis Legion NFT with a $200 loan from DeFrag.

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