Genesis Global Capital has completed one of its first US$6 million loans exclusively backed by non-fung tokens (NFTs) to Meta4 Capital, a Miami-based investment management firm. This loan is known not only for the amount, but also for using only non-fungible tokens (NFTs) as collateral rather than including broader liquid collateral. Meta4 operates as an NFT project fund with the support of Andreessen Horowitz and specializes in acquiring supposedly rare and historically significant NFTs.
Proceeds from the Genesis loan were used to complete Meta4’s acquisition of three NFTs that were part of Sotheby’s “Native Digital” October NFT auction: $3.4 million in gold Bored Ape Yacht Club #8817, Rare Pepe PENOPOULOS for $3.6 million and FingerprintDAO Mitchell’s NFT F. Chan for $1.5 million. These acquisitions served as a bridge of capital until Meta4 completed its Series B round on December 1 for an undisclosed amount. All Meta4 investors received a proportional share of each item purchased.
Brandon Buchanan, CEO and co-founder of Meta4 Capital, told Cointelegraph that NFT-backed loans provide a better way to manage the risks of the underlying asset, typically ether (ETH).
“NFTs that would otherwise have been largely fixed are now being launched and we can economically build a higher-than-interest rate return for our investors, either by purchasing additional NFTs or by generating revenue through DeFi protocols.”
Buchanan also expressed his “excitement” about partnering with a brokerage such as Genesis that provides “trust” and value to NFTs and NFT-backed lending.
Related: NFT-backed lending platform Arcade raises $15 million in funding round
Genesis Vice President of Institutional Lending Rosun Patel confirmed to Cointelegraph that the company is currently accepting NFTs, which are considered major players.
“We are looking at the most liquid NFTs with a high single value. At the moment, only a few CryptoPunk and Bored Apes fall into this category, in addition to Pak and Noun NFTs.
Encryption companies and protocols are leading NFT as a new form of security. The loan between Genesis and Meta4 Capital boosts the growth of financial products for institutional investors in the NFT asset class.