Kraken’s founder and CEO, Jesse Powell, recently announced in an interview with Bloomberg News that the cryptocurrency exchange will launch a non-fungible token (NFT) market that will allow users to borrow against their NFTs.
Powell stated that the company plans to get into the NFT space in early 2022 and hopes to add the feature to determine the liquidation value of an NFT and whether it can be put as collateral on a loan.
“When you deposit a cryptocurrency with Kraken, we want to reflect the value of that currency in your account,” Powell said. “And if, on the other hand, you want to take out loans.”
The value of NFTs is across the spectrum, however, and only a small percentage of token holders have a digitally rated collectible for as much as a CryptoPunk, the minimum price of which at the time of writing is 66.9 Ether (ETH), or $ 273,673.
According to Powell, the utility of NFTs will explode next year:
“Phase one was speculation, phase two is buying art and supporting artists, phase three will be the functional use of NFTs.”
Likewise, Kraken recently acquired Staked, an infrastructure platform that enables unsecured cryptocurrency bets to be made to attract new investors. Kraken customers can now earn crypto rewards and returns while maintaining control of their digital assets.
Founded in 2011, Kraken has grown to become one of the largest cryptocurrency exchanges in the world, which, according to data from CoinMarketCap, is at the forefront in terms of average liquidity, volume and reserves of digital assets.
Kraken’s announcement shows how NFT-backed loans are becoming more common as more DeFi platforms like Arcade and Nexo offer this new loan model. As Cointelegraph recently reported, Arcade closed a $ 15 million financing round in December to expand its offering and attract more investors to its NFT secured platform.