The non-fungible token (NFT) rental market shows great potential for growth and deserves close monitoring as “Airbnb of the metaverse,” according to a recent report by the Asian Digital Asset Platform matrix port.
Looking at the current landscape, the report says, NFT financialization is “clearly divided into the five verticals of fractionation, leasing, pricing, lending, and aggregation.”
It argues that in order for liquidity and returns to be generated from NFTs, “these key elements must be built in order for the finance layer to function efficiently and be scalable”.
Basically, according to the study, NFT rental can look like this:
- collateralized rental, where tenants pledge assets as protocol-managed collateral;
- wrapped NFT and custodial by the marketplace under which tenants pay rent and receive a wrapped NFT while their lenders lock the tokens into the protocol and secure the rent;
- Dual-role expiring NFT that allows tenants to assume the role of users, and the NFT automatically expires once the rental period expires.
The report’s authors argue that the NFT rental market remains at the forefront as large-scale adoption of blockchain games, guilds, and metaverse is imminent. It is expected that the rapid development of such virtual experiences will result in large amounts of unused NFTs being held by users, guilds and projects.
“As such, having an active rental market in place is critical to reducing the cost of participation and increasing existing user engagement through rental income,” Matrixport said, adding:
“Our thesis in this industry is that a deposit-free rental model with a product design for the separation of ownership and use of an NFT would prevail in this market.”
At the same time, the authors acknowledge that NFT lease protocols in this area would need to work closely with projects to develop reputation and trust around them, as there are no universal coinage standards built on NFTs in terms of ownership-benefit separation Services.
The report states that projects like Double log, reNFT, IQ protocoland Pine loan try to come up with different designs to solve this problem.
It came to the conclusion
“In addition to separating the ownership and utility of NFTs, we can expect that new use cases such as reserving or subletting NFTs (i.e. the Airbnb model in NFTs), installment loans, and buy-it-pay-later options will be a new one Unlock a range of applications for games, guilds, metaverses and NFT projects for users to use.”
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