Pantera Capital participated in a $15 million Series A fundraising round for Arcade, a platform that allows users to use nonfungible tokens (NFTs) as lending collateral. The platform’s collateralization of NFTs, according to Lauren Stephanian of Pantera Capital, could entice institutional investors to participate.
Pantera, Golden Tree Asset Management, Franklin Templeton Blockchain Fund, Protofund, Castle Island Ventures, Eniac Ventures, Probably Nothing Capital, and Lemniscap, as well as angel investors Quantstamp CEO Richard Ma and BlockFi CEO Zac Prince, announced the investment on Wednesday in an attempt to link NFT-collateralized borrowing with the decentralized finance space.
The investment was an asset funding round, according to co-founder Robert Masiello, and would help Arcade increase its workforce, release the platform publicly, and reach new users. Arcade currently has 13 employees and is seeking for a variety of positions in product, business development, marketing, and engineering.
Arcade is currently in private beta and will be available to the general public in early Q1 of next year, according to Masiello. Arcade claims that it has arranged the largest loan of $800,000 and that its overall loan volume to date is $3.3 million on a total of $10 million in assets in a private release.
The platform presently allows Ethereum-based NFTs as assets for ERC-20 token lending, notably wrapped ether (wETH) and stablecoins DAI and USDC. Other blockchains and Layer 2 networks, according to Masiello, are also being considered for support in 2022.
NFTs, according to Arcade co-founder Gabe Frank, make up a large component of the ever-growing DeFi business, which is now valued at over $250 billion in total value locked. Despite enormous market capitalization, the lack of infrastructure in DeFi hinders NFT investors from reaching liquidity on their holdings.
Pantera Capital principal Lauren Stephanian stated in a press release that the Arcade’s collateralization of this financial asset will encourage engagement from new organisations from both the digital and traditional art and finance worlds, such as high-net-worth individuals, institutional lenders, DAOs, NFT collectors and creators, and businesses with NFTs on their balance sheets.
Institutional lenders and high-net-worth retail investors are the primary targets of Arcade. According to Masiello, the platform earns “a little percentage” of every transaction that is performed on it.
NFTfi and Pawnfi, for example, are two platforms that facilitate loans against NFTs. Arcade’s competitive advantage, according to Masiello, is that it permits many NFTs to be bundled together to obtain a single loan via a wrapped asset called wNFT. He said that because there is only one loan transaction rather than several ones, this helps with lower gas fees.
Arcade’s total funding to date is $17.75 million, thanks to the Series A round. According to Masiello, the business raised $2.75 million in May, which was also an equity round.
Arcade presently lacks a native token, however, Masiello stated that the company is considering launching one.
Other platforms, such as ETNA Network and Lithuania-based lending platform Drops, have also established or are in the process of introducing services to facilitate loans against NFTs. Teller Finance, a lending protocol, revealed in March that certain of its users would be able to get credit without putting up any collateral, thanks to special NFTs.