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NFT finance Leveraging Non-Fungible Tokens

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NFT finance Leveraging Non-Fungible Tokens ( nft-finance-leveraging-non-fungible-tokens )

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a deterministic spot price for the assets and interest rates for the loan, as explained in the background. [42] The NFTs represented by ERC-721 tokens could have been wrapped in ERC- 20 tokens, which could then be used for creating a liquidity pool. Users would be able choose their preferred NFT from the liquidity pool and lease it or lend their own NFTs to the pool and earn interest. However, this would cancel the non-fungible property of the tokens and would not take into account the unique features of each NFT when pricing them using an AMM protocol. • Individual smart contracts for each loan: An alternative implementation that was considered was to deploy a smart contract for each lease offer or loan request. This would have ensured that the funds or NFTs for each loan or lease, re- spectively, would have been held in separate contracts. It could have added an extra layer of security in case of potential attacks. Should there be any breaches in the LoansNFT or LeaseNFT contract, a hacker would be able to drain the contracts. However, there would be a higher cost associated with creating each lease offer or loan request and potential users would be discouraged to use the platform. The cost for deploying a smart contract would be around 0.04 Ether and our implementation is targeted at providing a simple experience for the user and lowering their on-boarding costs. For this reason, we have decided to have two main contracts which hold all the transactions and data, while focusing on making them secure. • Single contract for both loans and leases: Another implementation would have been to create a single smart contract for both use cases of the platform. There would have been less overhead in the development of the contracts, however it would have increased the gas costs for the users. • No manager or pausable contract: Having a manager that can pause the creation of new lease offers or loan requests is arguably a decision that goes against the core principles of decentralization. However, we consider it to be an important part of the functionality of the project aimed to protect the users in case any issues with the behaviour of the smart contract are spotted. Even so, the ability of the manager is limited. He can pause and un-pause only the following functions: – createLeaseOffer – acceptLeaseOffer – createLoanRequest – acceptLoanRequest 45

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