NFT Financialization

Definition ∞ NFT financialization is the process of integrating non-fungible tokens into broader financial markets and applications. This involves creating financial instruments and services around NFTs, such as fractional ownership, lending against NFTs as collateral, or using them in decentralized finance (DeFi) protocols. It aims to unlock liquidity and expand the utility of NFTs beyond digital collectibles by enabling new investment strategies and market participation. This development allows for the valuation and trading of unique digital assets within a financial context.
Context ∞ NFT financialization is a rapidly developing area often featured in crypto news, with discussions around its potential to create new asset classes and investment opportunities. Debates often concern the true liquidity of these financialized NFTs, the risks associated with their valuation, and the regulatory implications of treating them as financial instruments. The ongoing evolution of this space is expected to significantly alter the landscape of digital asset ownership and investment.