Recently, Kraken founder and CEO Jesse Powell announced that the cryptocurrency exchange is working on a NFT marketplace that will appeal to customers who want to do more than just collect digital art.
Kraken marketplace would provide custody services and the exchange is working on a system where customers will be able to use their NFTs as collateral to borrow funds against. Powell told Bloomberg.
Powell said that Kraken is set to enter the NFT space in early 2022 and hopes to begin with the feature to determine the liquidation value of an NFT and whether it can be put up as collateral for a loan.
Founded in 2011, Kraken is one of the largest crypto exchanges worldwide, ranking among the top in terms of volume, average liquidity, and digital asset reserves. Recently, the exchange acquired Staked, which is an infrastructure platform that enables non-custodial crypto staking. Kraken customers can earn crypto rewards and yield while retaining control over their digital assets.
The announcement shows how NFT-backed loans are becoming increasingly commonplace as more DeFi platforms are entering into this new loan model. In December, Arcade closed a $15M funding round as part of a broader effort to grow its offerings and attract more investors to its collateralized NFT platform.
"this year will go down in the industry’s history as the year non-fungible tokens finally made it into the mainstream." said Powell "Phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs,...Using deposited NFTs as collateral on Kraken could be one of those uses"
It is worth noting that big competitors including FTX Exchange and Binance have already launched NFT marketplaces, and millions of users have signed up for Coinbase Global Inc.'s NFT waitlist.
