Where is the economic potential of rentable NFT lease

On September 14, Rentable, the NFT lease agreement, announced its closure. The founder said that he could not find a "product market fit point".

The NFT leasing platform Rental announced its suspension of operation a few days ago.

Although the platform can withdraw money at present, the leasing function has been disabled. Users can withdraw money before October 13. After that date, an emergency withdrawal will be initiated and tokens will be sent to their respective owners.

Rentable lets users rent their NFT agreement. Its founder announced that the agreement will be closed if it fails to find a "product market fit point".

Rentable is closed?

Rentable platform appears to let the holders rent NFT. In any case, everyone's NFT is left in their wallets. Rentable protocol provides services to Decentraland users, Meebits holders and Lobster DAO. According to Bonassi, "owners can get benefits without liquidation risk".

Emiliano Bonassi, the founder of the platform, said, "Rentable is like an agnostic theory, which realizes leasing without relying on specific use cases. Rentable V2 enables any dApp to provide leasing services for its users without integration (WalletConnect only), eliminating barriers between platforms."

However, the founder also had to face this less optimistic market, and had to announce that Rental could not obtain funds, and had little feedback from the market, The founder said, "It is possible for us to raise funds, but we have to wait. We choose to check the market adaptability of the product first, because we have funds for construction and audit. Therefore, the main reason for the closure is that after some adjustments, we have not found a point where the product market fits."

Although I have been squatting on various official websites in every corner of the Web3 field every day, I always have a strong feeling that NFT, DeFi, DAO, or the underlying functions of the blockchain, etc. The only constant in this ever-changing industry is that if you haven't seen the project and information for several days, you are likely to miss some new developments in the ecosystem.

In my opinion, NFT leasing is an uncommon but very attractive part of the NFT ecosystem. Although it also makes me frown when I see the news of Rental, the first thing to know about NFT leasing is that although this idea and play may extend into an unusual and interesting model, it has not been fully developed as a new thing. Failure to get good market feedback is sometimes expected.

There are relatively few project parties to develop the NFT leasing market, and they carry out business in unknown areas. Most platforms that are optimistic about this idea have not yet started to operate. However, this idea is very attractive. If it can gain attention in the wider NFT community, it may have a significant impact on the pattern of Web3. Although this cannot be guaranteed, it is unwise to deny it. Next, let's take a look at how NFT leasing works.

What is NFT leasing?

People who own some kind of NFT can rent it to others who need it in a short time. The NFT leasing market uses blockchain technology similar to Defi to promote secure transactions, and guarantees that NFT will be returned to the owner after the lease period.

How to rent NFT?

There are two broad ways to lease NFT: unsecured lease and secured lease.

Mortgage lease

In markets with built-in loan and borrowing functions, holders can list their NFTs. Tenants interested in NFT will start the lending process, which will involve placing NFT in a smart contract. Next, the lender and the tenant will agree on the conditions of the smart contract. The leasing procedure starts after the terms are determined and agreed.

This type of lease revolves around the borrower providing collateral to temporarily use someone else's NFT. For example, BoredJobs belongs to this type. Every BAYC transaction is negotiated by the brand inquirer and NFT owner, and 15% of the share belongs to the platform to pay the operating costs.

Another example of operating in this mode is reNFT, a DAO established at the end of 2020, whose main purpose is to promote the leasing of NFT. In October last year, reNFT announced a round of financing led by Animoca Brands, with a total amount of $1.5 million. ReNFT also cooperated with Rarib and claimed that the platform would take the lead in integrating its leasing functions in the future. The company's main product is a protocol layer that allows point-to-point leasing of ERC-721 and ERC-1155 NFT on the Ethereum main network.

On the technical level, borrowing with reNFT means transferring your NFT to their smart contract rental list. The lender then specifies the lease price (how much compensation they expect to get each day), the NFT price (as collateral, proposed by the borrower), and the lease term.

The collateral model has several potential problems.

First of all, the price of NFT as collateral by the borrower may be as daunting as the price of buying the NFT community. For example, the price of renting a boring ape may make migrant workers like me shake their heads, which may reduce the number of viable potential users.

Second, this is an interesting question. The borrower may decide not to return your NFT. Of course, you have a mortgage as a pledge, but compared with my beloved NFT, if someone really takes away the economic compensation, it can only be said that it is a comfort on the economic level.

Leasing without collateral

The procedure of lease without collateral is similar to that of lease with collateral. The only difference is that the tenant will never receive the original NFT, which is different from the lease with collateral. Instead, create a packaged NFT for renters, which has the same characteristics as the original assets and is supported by real assets. Once the contract ends, the packaged national trust fund will be burned. In this case, neither the tenant nor the holder needs to provide any collateral. Therefore, the financial risks of both parties have been reduced.

UnitBox DAO is a blockchain startup that provides such services. It believes that NFT leasing can lower the threshold and allow more people to join the game making ecosystem of the GameFi world, for example. UnitBox believes that the plot, character skin and equipment in the game can fully adapt to the concept of NFT leasing.

The leasing system of UnitBox is still in the testing stage, but the idea behind DAO is to create a "packaged" version of NFT by using the protocol to realize unsecured leasing. Suppose there is an investor (NFT owner) and an asset manager (player). The asset manager "rents" NFT for free, but distributes the income from the game to the NFT owner, who can recover the assets at any time.

Why would anyone rent NFT?

In addition to the above mentioned use of leased monkeys to do some IP extensions and advertise their products, renting NFT is a relatively cheap way to use some of the benefits provided by NFT, without having to buy, you can get access to unique member specific content.

Take an example for a better understanding. Stoner Cats is an NFT project created by Mila Kunis, an American actress. The holder must have seen all the TV programs he or she has owned countless times. Then he or she can rent Stoner Cat NFT. For the borrower, he or she pays a fee to rent a CD, watch the content, and then return it. This is similar to renting DVDs from video stores many years ago.

summary

As I said at the beginning and above, the leasing model has a long way to go before convincing the market feedback of the wider NFT ecosystem. But like everything in the Web3 world, this idea is full of potential and needs to be watched carefully.

In any case, the leasing model launched by such platforms has little to do with the game earning mechanism, but much to do with the leasing of intellectual property rights, but its core concepts are the same. As the focus of NFT swings back and forth between digital art and digital assets, most of the demand for NFT leasing market is related to liquidity and financial use cases. NFT is still maturing and transitioning from being regarded as an art category to having the attributes of traditional financial assets. Through the use of short-term and medium-term licensing transactions of NFT, this will have a greater impact on communities with IP value.

The rental market of NFT is still relatively small. Perhaps in the future, with more and more NFT application scenarios, the rental demand for NFT will rise, and more NFT rental sites will begin to appear.

Original title: "Where is the economic potential of leasing when the NFT leasing platform is closed?"

Written by: s1

Source: Foresight News, old yuppie