This is what stands in the way of the “NFTification” of DeFi


Ask anyone what an NFT is, and they’ll instinctively think of digital art – the CryptoPunks, Bored Apes, and Ether Rocks that have sold for eye-watering sums.

In some circles, non-fungible tokens have been dismissed as a vehicle for speculation, with critics lamenting that demand for such assets is fueled by greed.

But this argument does not give us the full picture. We’re barely scratching the surface of what these unique tokens can achieve – and new use cases are continually emerging.

The music industry is tentatively exploring what NFTs have to offer. Live Nation, one of the world’s largest entertainment companies, has started offering digital versions of ticket stubs, giving fans a virtual memento of concerts they’ve attended. Other platforms allow consumers to invest in new music and receive a share of royalties. TV shows and movies are also being funded by NFTs – and despite the backlash from gamers, gaming brands are also getting into the technology.

NFTs also have the potential to enhance existing crypto services, DeFi being one of them. What if this technology could be used to unlock access to specific authorized services… and could we see popular crypto collectibles being widely used as collateral?

While “NFTification” of the decentralized sector is seen as inevitable in some crypto circles, there are certain hurdles that need to be overcome. Let’s explain why.

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NFTs cost a TAUT

Inevitably, any discussion of what is preventing NFTs from playing a larger role in the DeFi ecosystem must begin with the cost of minting these tokens.

Even on a robust Layer 2 network, transaction fees mean it is often unprofitable to create, distribute and trade NFTs. This in particular explains why these crypto collectibles are so exorbitantly priced – not to mention why new use cases for non-fungible tokens are only being explored at a glacial pace.

As traders eagerly await the launch of Ethereum’s Proof-of-Stake network, this blockchain has become unaffordable for many everyday users. While faster, cheaper and more scalable rivals have appeared in recent years, some have been blighted by repeated failures, calling their reliability into question.

But what if users could be offered a completely gasoline-free experience when transacting? Could this be the silver bullet that attracts tens or hundreds of millions of users into space – people who would be attracted to the development it would encourage?

Such an approach would be beneficial for NFTs and the DeFi sector, giving crypto enthusiasts the freedom to transact as they wish without worrying about the cost. But from an infrastructure perspective, there are other issues that need to be considered.

Innovate in DeFi

Currently, high gas costs mean that trading and farming are financially impractical for small users, while slow bridges that connect the Ethereum mainnet to Layers 2 cause frustration. A lack of rigidity has also emerged in the DeFi space – with users frequently moving between platforms in search of the best short-term opportunities.

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Of course, an even bigger hurdle is getting people to see what decentralized protocols and automated market makers (AMMs) have to offer. A poor user experience – and more sophisticated features on centralized platforms – often provide little incentive for investors to make the leap to DeFi. The downside here is that consumers end up giving up control of their own crypto.

But it doesn’t have to be – and a team claims to have built the first NFT-powered AMM that was designed “from the ground up to solve a series of critical issues for DeFi”.

A gem of a product

Ruby.Exchange builds its infrastructure on SKALE, which is described as a powerful multi-chain solution for Ethereum. SKALE’s chains have no gas costs – and feature a fast, decentralized and secure bridge to the mainnet where transfers back and forth can take minutes, rather than hours or even days.

And while the value of NFTs may be uncertain, with limited ways to use them, Ruby offers gems – “beautiful, generative works of art that build loyalty by embodying real usefulness as well as artistic value.” These active ingredients occupy a preponderant place within its MA.

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This exchange says it offers a feature-rich and gamified user experience where NFTs are created for user profiles, as vouchers for trading fee rebates, and to ensure clients can access features premium they’ve come to expect – native graphics and advanced analytics among them. Farm yield boosts are another use case.

Additionally, a gamified trading and farming experience provides that elusive “grip” that DeFi protocols currently lack – rewarding long-term commitment and benefiting all users by helping to prevent capital from migrating elsewhere, which affects liquidity.

Going forward, new classes of NFT gems will be created – and as Ruby’s analytics and liquidity provider management dashboard is established, non-fungible token ownership will be key to unlocking the access.

NFTs and DeFi showed so much promise in their early days, transforming the worlds of art and finance. Ruby.Exchange is now determined to show how powerful the “NFTification” of decentralized finance can be.

Disclaimer. TAUT does not endorse any content or product on this page. Although we aim to provide you with all important information we may obtain, readers should do their own research before taking any action related to the company and take full responsibility for their decisions, and this article cannot no longer be considered as investment advice.


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