Definition ∞ NFT finance, often shortened to “NFTfi,” refers to the emerging financial ecosystem built around non-fungible tokens. This includes services such as NFT lending, borrowing against NFTs, fractionalization of NFTs, and using NFTs as collateral for loans. It allows asset holders to derive liquidity and financial utility from their unique digital collectibles. This sector expands the financial applications of digital assets beyond traditional cryptocurrencies.
Context ∞ NFT finance is a rapidly evolving area in crypto news, driven by the increasing value and utility of NFTs. The discussion often centers on risk assessment for illiquid and volatile digital assets, as well as the legal implications of using NFTs as collateral. A critical future development involves standardization of NFT appraisal methods and the creation of more robust lending protocols. These aim to reduce risk and increase capital efficiency within the NFTfi ecosystem.
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