Genesis Global Capital completed one of its first all-NFT-backed $ 6 million loans to Meta4 Capital, a Miami-based Web3-focused investment management company. Not only is this loan notable for its size, but also for the fact that it only uses non-fungible tokens (NFTs) as collateral rather than the inclusion of a broader liquid guarantee. Meta4 operates as an NFT-VC with the support of Andreessen Horowitz and specializes in the acquisition of supposedly rare and historically significant NFTs.
The proceeds from the Genesis loan were used to complete Meta4’s purchase of three NFTs that were part of Sotheby’s October NFT Natively Digital auction: the Bored Ape Yacht Club # 8817 in gold for $ 3.4 million; the rare Pepe PEPENOPOULOS for USD 3.6 million; and a $ 1.5 million NFT from Mitchell F. Chan of FingerprintDAO. These acquisitions served as bridging capital until Meta4 closed a Series B Round on December 1 for an undisclosed amount. All Meta4 investors received a proportional share of each item purchased.
Brandon Buchanan, CEO and Co-Founder of Meta4 Capital, told Cointelegraph that NFT-backed loans provide a better way to manage the risk of the underlying asset, usually ether (ETH).
â ???? NFTs that would otherwise be in a largely static state now have a different role, and we are able to financially shape above-interest returns for our investors, either by purchasing additional NFTs or by boosting performance through DeFi protocols. â? ???
Buchanan also said he was “excited” about partnering with a broker like Genesis that brings “credibility” and value to NFTs and NFT-backed loans.
Genesis Vice President, Institutional Loans, Roshun Patel told Cointelegraph that the company is accepting “premium” NFT for the time being.
“We’re looking for the most liquid, highly customized, high value NFTs. Currently only a few CryptoPunks and Bored Apes fit into this category, as well as some NFTs from Pak and Nouns, ”he said.
NFTs as a novel form of security are spearheaded by domestic cryptocurrency companies and protocols. The loan between Genesis and Meta4 Capital promotes the growth of financial products for institutional investors in the NFT asset class.