Sharky.Fi - The Peer-to-Peer Bank of NFTs
Today we take a look at Sharky, an NFT DeFi Project on Solana.
At the time of writing, the Solana market cap is $3.63 billion with a 24-hour volume of $1.2 billion. The price of SOL is $9.90 and its market dominance is 0.44%. The Total Crypto Market Cap is $793.27B, down 0.57%. The NFT transaction volume surpassed 3,220,320 SOL, closing in on $32.0M in the last 7 days.
Introduction
Sharky.fi is a peer-to-peer lending and borrowing platform for NFTs and SOL. Although having launched in April 2022, Sharky hit the spotlight in September when they sold out their 10,111 NFT Collection.
Today we look at their Lending & Borrowing platform and its features, as well as the utility of Sharx, the NFT Collection powering the project.
Summary
How NFT DeFi can Offset Inflation
Lending SOL
How does APY work?
What happens if you’re not paid back?
Borrowing SOL with your NFTs as collateral
Lending & Borrowing Process
NFT Utility
Success Metrics
How NFT DeFi can Offset Solana’s Inflationary Mechanics
Solana, like many other cryptocurrencies, has an inflation rate. Solana's annual inflation rate is currently 6.496% and will decrease by 15% every year. It will eventually stop at a fixed rate of 1.5%.
In 2022, the Solana token circulating supply increased by 20%. This is a result of token unlocks and staking rewards. Staking your Solana tokens through a Validator is one of the many ways users can offset its inflation rate.
Sharky designed a high-risk/high-reward product which can be used to offset the circulating supply increase caused by token unlocks and SOL’s inflation rate.
Lending SOL
Sharky makes it possible for any user to put their SOL tokens in use. Although this scenario of lending SOL is riskier than staking on a DeFi protocol or a Validator node, the APY is 30x-50x higher.
When successful, this strategy allows to offset the SOL inflation %, hedge against negative price action of the token, or to accumulate tokens for more NFT purchases.
Users can lend to a collection of their choice. There are over 100 different collections available to transact on the platform. Most loans have a duration of 7 days to 14 days.
How does the APY work?
The APY is 240% but you’re not receiving 240% on your loan. APY is the Anual Percentage Yield.
You’re getting a return based on this APY for 7/14/16 Days, depending on the loan duration.
Example: If you were to loan 100 Solana with a 14 Day Duration, the borrower would pay you back 100 + 2.37 Solana in interest.
What happens if you’re not paid back?
What makes Sharky.fi and any lending product risky, is that you might not get paid back on your loan. However, Sharky borrowers must provide collateral to the lender. For example, a borrower can place an Okay Bear as collateral. If the loan is not paid, you will receive the NFT.
If the colateral suffers a major price drop and the borrower does not pay back, you will have lost money in this loan.
In the unfortunate case that the NFT goes to 0 (two weeks in NFTs is a long time) and the borrower does not pay the loan, you will end up with no Solana and a worthless NFT.
Borrowing SOL with your NFTs as collateral
Liquidity is king. However, sometimes it is too hard to let go an NFT if you have conviction on the underlying project. Sharky.fi opens up a great opportunity by letting you borrow $SOL using your NFTs as collateral.
To borrow, you simply need to choose the collection you want and the loan offer. Your NFT will be frozen but since it is an escrow-free loan, it will stay in your wallet. Once you pay your loan and it’s interest, your NFT is freed.
Lending & Borrowing Process
Success Metrics
Sharky has been consistently beating expectations since their rise to fame in September. On the 20th of December the peer-to-peer NFT lending platform reached three amazing milestones.
200,000 SOL Total Value Locked
10,000 Active Loans
220,000 Secondary Volume on their NFT Collection
Just yesterday, Sharky posted more statistics.
NFT Utility
The 10,111 NFT Collection has a bunch of utility coming.
On the 30th of November, Sharky began taking a 16% fee out of loan interest. 25% of these fees, plus 50% of royalties earnings will be distributed to Level 2+ Sharx Holders.
The projects token $FISHY will have several use cases such as unlocking access to Pro-Trading Tools and Analytics, being used for participating in defaulted NFT raffles, to upgrade and buy traits.
In the Sharx NFT bitepaper, a Gamified Duel Revenue Share tool is teased, but there are no details currently.
Conclusion
NFT DeFi is growing with projects like Sharky taking the lead.
Sharky’s TVL, Loan Volume, Active Loans and Secondary Volume on Sharx are evidence of a successful first quarter for the team.
Given the volatility of NFT prices & risk of default being high especially when there are big drawdowns in NFT projects, it is considered a high risk strategy that only experienced users should use.
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