Mantra: solving chain illiquidity via NFT lending
In the last NFT hype cycle in SmartBCH we all could appreciate a very notable phenomenom: most users became very illiquid (no SEP20 tokens in their wallets) due to high and rushed consumption of NFTs, either via new mintings coming every day or via secondary market sales in Oasis.
This illiquidity phenomenom then started to amplify some other side effects: people stopped or reduced activity in minting or participating in new projects and products, even if they were good; or if they wanted to participate, users had to remove funds from one project to move them into another, sometimes sacrificing good positions.
The fact is, users of SmartBCH reached a point where they had lots of NFTs in their wallets -in many cases very valuable ones- but very low amounts of tokens. That sort of contributed to the chain's economy getting stuck because the money got concentrated in the hands of a few (mainly project owners), and the vast majority remained with very low liquidity.
Ideas for NFT liquidity start igniting
Two members of the SmartBCH community and users of the chain (Telegram: @kiok46 and myself, @mortinp) got together to tackle these problems, and after realizing the above mentioned facts, we also understood and agreed on the general idea that a chain economy needs systems that help heal liquidity on an ongoing basis, otherwise projects will get stalled and the chain will stop growing. If these systems are not in place, chain economies will quickly become unhealthy in the presence of these types of products that sell not-so-liquid assets, like NFTs.
Core problem is: NFT collections (and other types of projects as well) will continue to pop up, but money (liquid SEP20 tokens) will not necessarily keep flowing and will be getting even more concentrated, which leads to the economy becoming passive and money-recirculation reaching unhealthy lows.
We decided to tackle this problem starting with the following hypothesis:
NFTs are valuable assets and they can be financialized. You should be able to do with them the same you do with any other type of valuable assets.
Lending is an activity that works well for re-circulating the accumulated capital of a few people into the hands of people with less resources or temporal illiquidity.
People with less resources may have less liquid assets (fungible tokens) but most probably they own non-fungible assets, since their lack of liquidity is most probably due to them buying lots of NFTs.
So, a marketplace to borrow tokens using NFTs as collateral is the first solution we envisioned, built and deployed.
Mantra: peer-to-peer lending marketplace using NFTs as collateral
Mantra is a peer-to-peer decentralized marketplace where SmartBCH users can borrow tokens directly from lenders using NFTs as collateral.
The platform allows borrowers and lenders to meet in a single place and participate in an NFT financialization economy via borrowing and lending against the value of NFTs, allowing money to flow from concentrated wallets to more illiquid wallets.
The terms of each deal are set openly by the participants (borrowers and lenders) via Orders and Bids. The terms of a loan include: borrowing/lending amount, payback interest and duration of the loan.
Mantra launched with some unique features we haven't found in any other marketplace:
You can add multiple NFTs of multiple collections as collateral in a single order. We call this a bundle. This makes it possible to create high value orders by combining several low-value NFTs.
You can borrow not only the native currency (BCH), but many other tokens, too. Right now we support the tokens of each collection listed and we believe this should create some nice dynamics between Mantra and many community projects that already exist.
Bulk sales of NFTs: By listing your NFTs for a loan of 0 (zero) days duration, you'll be effectively creating a sale since liquidation happens instantly. This is a feature that users have been taking advantage of a lot.
Multichain support under the same product: besides SmartBCH, Mantra also currently supports Dogechain inside the same product and url, and is ready to support more EVM-compatible blockchains as well.
With Mantra we want to enable a money recirculation flow from power users (whales!) into less liquid users who need money for further investments or for solving real life problems, allowing them to squeeze liquidity out of their NFTs while also making the whole chain economy move at a higher speed.
So far the results haven't fallen short. At the time of writing this article (one day before the first month of operation), these are some stats (only SmartBCH):
There is currently 8 loans running, amounting a total of 12.2 BCH and 980 lawUSD.
Check them here: https://app.withmantra.com/app/market/deals?chain_id=1000085 orders have been filled and completed (not running currently), most of them being bulk sales of over 20 NFTs in a single order, amounting to over 1k NFTs sold.
Check them here: https://app.withmantra.com/app/market/completed?chain_id=10000There is currently 65 orders listed in the market, most being bulk sales of multiple NFT collections including Shorais, Kenshos, Reapers, PunkApes, Queens and others.
Check them here: https://app.withmantra.com/app/market/orders?chain_id=10000
This all has occured under a low market activity situation in SmartBCH, which makes us very confident for a future uprise.
We have also observed that, as we predicted, LawPunks and special items of some collections (mainly Kenshos) are the NFTs being used to take loans, due to them being the most valuable ones holding solid floor prices, which adds confidence from lenders at the time of supplying money for a loan.
However, we feel the option of borrowing (instead of selling) hasn't been taken advantage of as much as we want it to be, probably due to users still not understanding the power of leverage.
Note: we will be writing educational articles on this matter as well as success case studies we've already collected some data about.
Future of Mantra
Mantra is only one piece of the vision we have set ourselves for solving blockchain liquidity problems.
We want to build and provide several tools that will make liquidity more readily available for those who need it, as well as open new market dynamics for multiple participants. We have an ambitious development plan we are already working on which we hope will position our project well in the future we envision for blockchain tech.
We will be deploying the next tools as we finish each milestone in our roadmap. We're tackling NFTs at first -with cool things like party bidding and fractionalization-, but we will continue to move to more complex topics as we also become an R&D project.
Roadmap and clarity about most of the tools we have planned will be disclosed in an upcoming whitepaper.
LINKS:
Mantra Website: https://withmantra.com
Telegram Community chat: https://t.me/MantraProtocol
Market Realtime Bot for SmartBCH: https://t.me/MantraProtocol_Realtime
Market Realtime Bot for Dogechain: https://t.me/Mantra_DogeChain_Realtime
You sure have some great ideas. Although I've heard about Mantra, today is actually the first time I had a good look at the website. Pretty cool!