💱Benefits and Risks

In the GoatNFT ecosystem, both lending and borrowing NFTs carry their unique set of benefits and risks. Lenders have the freedom to set lending terms like collateral amount, rental fee, and duration, while also bearing certain risks.

Considering Market Volatility

  • Volatility Mitigation: Acknowledging the high volatility of cryptocurrencies like ETH or KLAY, GoatNFT, in its initial phase, allows the use of stablecoins like oUSDT and USDT for collateral and rental fees.

Lender's Risk and Reward Assessment

  • Lenders must judiciously evaluate the value of their NFTs to set appropriate collateral and rental fees, considering the risk of borrowers not returning the NFTs.

Scenario Analysis: Price Fluctuations

  • NFT Price Increase:

    • Benefits:

      • Borrower: May gain from increased value opportunities.

      • Lender: Earns rental fees and benefits from the NFT's value appreciation.

    • Risks:

      • Borrower: Loses the chance to profit from the NFT's increased value (Opportunity Cost).

      • Lender: Risk of borrower not returning the NFT, opting to forfeit the collateral for profit (Lost Opportunity Cost for the lender).

  • NFT Price Decrease:

    • Benefits:

      • Borrower: No loss incurred as the NFT is rented, not purchased.

      • Lender: Continues to earn passive income from lending despite price drop.

    • Risks:

      • Borrower: Lost opportunity to rent or buy at a lower price.

      • Lender: Difficulty in recovering and selling the NFT quickly if its price is expected to fall.

Through GoatNFT, lenders and borrowers can navigate these various scenarios, with each party needing to carefully consider the potential benefits and risks involved in the NFT lending and borrowing process. GoatNFT's platform facilitates this with a focus on providing a secure and transparent environment for all transactions.

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