On Wednesday, June 14, two Rolex timepieces, a "Pepsi" GMT Master II and a Milguas Blue Dial were collateralized to secure a loan of $14,500 USDC -- all on-chain.
The loan came together through a collaborative effort between DeFi lending protocol Arcade.xyz and 4K Protocol a platform that facilitates physical NFT minting and logistics for marketplaces, brands, dapps, and more.
These @ROLEX watches, stored at @4KProtocol, are being used as collateral for DeFi loans on Arcade.
Using Real-World Assets (RWAs) like luxury goods on-chain could open up a huge market for DeFi. pic.twitter.com/17JB2R7z6I
— Arcade.xyz (@Arcade_xyz) June 14, 2023
In a recent tweet on the loan, Arcade advisor and Web3 personality Cirrus shared that the two Rolexes were collateralized at a 12 percent APR, with only 1.84 percent interest. He further explained the process, stating that "The Rolexes were sent to an escrow company [4K Protocol] who then sent back NFTs representing ownership of the watches."
He shared that the idea is, the borrower can now use those NFTs to tap into global liquidity, instead of taking what might be considered a predatory loan from a local pawn shop. In the event the borrower defaults, the lender can use the NFTs to redeem the physical watches from escrow.
Cirrus further expressed that this type of scenario is "One of the most obvious and easy to understand use cases of NFTs," and that "Global liquidity will eventually always get you better rates than local liquidity" -- a statement that is backed by the continued growth of Arcade.xyz, which just reached a milestone of $100 million USD in total loan volume on its platform.
Lending mechanics aside, the tokenization of real-world assets (RWA) appears to be picking up steam across a variety of sectors -- whether through tokenized economies as expressed at a WEF panel in January or through the tokenization of physical collectibles like those from Courtyard.
In the case of traditional assets, the panel expressed that the world could soon see the tokenization of RWAs like carbon credits, housing, electricity, government bonds, foreign exchange, and more. During the panel, Bitkub CEO Jirayut “Topp” Srupsrisopa expressed that "tokenization will be the foundation of the digital economy going forward."
As for the $400 billion USD collectibles market, Courtyard believes that there is a prime opportunity to bring it on-chain, and has already begun to tokenize and custody collectibles like sneakers, rare trading cards, watches, and more.
Whatever the asset is, if it can be bought, sold, traded, or collateralized -- chances are that in the near future, it will live on-chain, providing a larger and more accessible global market across sectors.
In other news, adidas Originals and acclaimed artist FEWOCiOUS unveil exciting collaboration.
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