FODL, a decentralized leverage trading platform, is attempting to bridge the gap between DeFi and NFTs. It thought it could probably help its traders get a head start as it looked into use cases including taking NFTs as collateral. NFTs from the Bored Ape Kennel Club (BAKC) and the Bored Ape Yacht Club (BAYC) are being given away in the amount of $1 million. There are 24 BAKC NFTs and 1 BAYC NFT in total.
It’s all part of a contest in which FODL traders can win raffle tickets by staking at least 1,000 FODL tokens between February 14 and April 30. Every month, the site will provide extra tickets to its top five traders, as well as influencers who promote the platform on social media. The winner of the (mystery) BAYC NFT will be notified when all 24 BAKC NFTs have been distributed via drawing.
NFTs, distinctive tokens that represent ownership of digital assets, have recently exploded in popularity in the cryptocurrency and pop culture worlds, with celebrity collectors such as Paris Hilton, Eminem, and Steph Curry flocking to the BAYC NFTs. In the shape of the BAKC and the Mutant Ape Yacht Club, the BAYC has produced a couple of legitimate offspring collections (MAYC).
BAKC NFTs currently have a projected minimum value, or floor price, of around 8.6 Ethereum or $27,000. The floor price of BAYC NFTs is at 100 ETH ($316,000).
NFTs are one of Ethereum’s most important subsectors, accounting for $25 billion in total sales volume last year. It’s become equally as significant as DeFi, a collection of blockchain-based protocols that allow users to trade assets, borrow money, and even take on risks.
FODL is no stranger to danger. Users can leverage their trades on the decentralized platform. Leverage is borrowed capital in both crypto and traditional finance. On FODL, this means that traders can use debt to raise the amount they’re dealing with, which they can do by taking out a “flash loan” through AAVE or Compound.
Flash loans are frequently used to take advantage of arbitrage circumstances in which an item trades at various prices on separate platforms; it’s a type of trade in which a significant sum of money can be borrowed, spent, and repaid all in the same transaction. The flash loan is being used to increase leverage beyond the principal in this scenario.
Risks are higher, but the profits could be bigger. If things don’t go as planned, a trader may consider selling his or her NFT.