NFTs Are Emerging As a Lucrative Investment Strategy For Mortgage Repayment

By Stan Peterson
Published November 8, 2021 Updated November 8, 2021
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NFTs Are Emerging As a Lucrative Investment Strategy For Mortgage Repayment

By Stan Peterson
Published November 8, 2021 Updated November 8, 2021

The Non-fungible token (NFT) market has been on the rise in the past few months as more people become familiar with the metaverse concept. This burgeoning crypto niche is getting interest from popular figures across multiple industries, including entertainment, sports and the creative sector. 

So, what’s in it for the common folk? For starters, it is crucial to understand that NFTs are indistinguishable in nature which means that each token is unique. As such, NFTs have become the tools and means to the metaverse (virtual world) and are being used to represent artwork, digital collectibles and in-game items on blockchain ecosystems. 

That said, the biggest NFT adoption driver has been play-to-earn games such as Axie Infinity and Decentraland. The former has been hitting record volumes, with the total transaction volume standing at over $2.7 billion as of press time. Some families in Thailand and the Philippines have been playing Axie Infinity to support their families. 

Can this model be borrowed to repay mortgage loans? Well, not many stakeholders from the NFT and real estate market have explored this option. However, the opportunities theoretically show that NFT gaming or investing could be an excellent way to settle traditional debt. This is because of the lucrative returns and the underlying potential of a metaverse future. 

Settling Mortgage Debt Through NFTs 

While the concept may seem far fetched, the whole point comes down to meeting one’s mortgage payment obligations. Currently, the average interest rate on mortgages in the U.S ranges between 2.5% and 3.25%, depending on the repayment period. This is a bit of a stretch for homeowners, given that bank savings only offer a meagre 0.6% APR on average while money market returns are at 0.9%. 

The big question then is, where can mortgage borrowers get better returns to meet their debt obligations? By now, most investors have heard about the crypto market and Bitcoin in particular. Though this leading crypto asset has been a good investment play for the past decade, emerging niches such as NFTs are proving to have a better ROI; of course, the risk is also significantly higher. 

Mortgage borrowers globally can jump into the NFT bandwagon to increase their wealth through various investment strategies. As mentioned earlier, play-to-earn games are one way to get involved in the NFT space. For instance, Axie Infinity players receive Smooth Love Portion (SLP) tokens as rewards for playing the game. These tokens can be sold in secondary crypto markets in exchange for fiat or other crypto assets. 

In most cases, the value realized from such sales will often surpass the ROI from a bank savings account or money market investments, making NFTs a good alternative investment strategy for mortgage repayments. 

Banking on the Future of the Metaverse 

The metaverse is bigger than play-to-earn games; this futuristic iteration of the internet features a virtual world where most concepts that exist in reality can be replicated. Today, the NFT niche has advanced to include platforms where users can lend or borrow their digital collectibles to earn passive income from the idle assets. This passive income can be used for mortgage repayments as well. 

One such ecosystem is the Drops NFT lending platform, which allows digital item owners to use their NFT or DeFi tokens for borrowing and lending purposes. With Drops, metaverse item owners can place their NFTs as collateral to borrow or provide a loan. The current APY for users who provide a loan on Drops through the USDC stablecoin is at 9.18%, much higher than traditional financial institutions offer. 

Notably, this pioneer NFT lending platform leverages permissionless lending pools, allowing NFT owners to create or join existing pools. In addition, the users also have an opportunity to stake Drops’ native token DOP in return for network rewards. The Drops NFT lending platform is one of the few examples that are adding value to the NFT ecosystem. 

Should the potential of such NFT lending and borrowing ecosystems be integrated with traditional markets, NFT owners can meet their traditional debt obligations without going to a bank. It is no surprise that even big corporations such as Visa and Budweiser have taken a keen interest to the extent of each purchasing an NFT.  

Wrap Up 

NFT development might still be in the early stages, but it is happening faster than most crypto natives expected. This year alone, the NFT market has recorded billions in sales, with top digital collectibles such as CryptoPunks and Bored Ape Yacht Club (BAYC) going for millions in some cases. 

Even better, the hype seems to have just begun. Facebook’s Mark Zuckerberg recently spoke in a zoom meeting where he outlined the company’s goal to focus on the metaverse, noting that they have rebranded the holding firm to Meta. Speaking to CBS morning, the Facebook (now Meta) CEO acknowledged that the metaverse is the future of the internet. He went on to explain that, 

“instead of being an internet that we look at, right, on our mobile phones or on our computer screens, it’s an internet that we are a part of, or that we can be inside of.” 

With such a promising outlook, NFTs stand a great chance of shaping the future of tomorrow’s digital world. Additionally, they are a great means to increase passive income, given that the ROI beats most traditional financial instruments. This is one of the crypto trends to keep close tabs on as we approach 2022!


The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Stan Peterson
757 Articles
Being an active participant in the Blockchain world, I always look forward to engage with opportunities where I could share my love towards digital transformation.