May 29, 2024
ParaSpace, Now Parallel Finance, Persists with NFT Lending
NFT

ParaSpace, Now Parallel Finance, Persists with NFT Lending

Despite rebranding to Parallel Finance to emphasize the decentralized finance (DeFi) ecosystem, ParaSpace, a nonfungible token (NFT) lending protocol, will maintain its focus on its core product amid challenges in the sector.

Yubo Ruan, CEO of ParaSpace (now Parallel Finance), revealed that the protocol uses diverse liquidity pools, dynamic loan-to-value ratios, and price-discovery partnerships to manage risks associated with high volatility. This strategy aims to address the issue of a lack of bidders for the underlying asset.

Ruan emphasized the viability of NFT margin lending despite the recent market downturn. He stated, “It serves a niche yet growing sector of collectors and investors looking for leverage in their investments.”

NFT trading volume has witnessed a 99% decline from its peak in May 2022 over the past year. However, there are signs of stabilization with blue-chip collections. Ruan envisions NFTs becoming digital passports for access to virtual and real-world utilities. Additionally, he anticipates the evolution of soulbound tokens serving as non-transferable proofs of experience, skill, and reputation.

As the protocol rebrands to expand its DeFi services, Ruan highlights two main focuses: liquid staking and Parallel L2. Parallel L2 aims for fast transactions with low gas fees and incorporates zero-knowledge proofs and Arbitrum Orbi for enhanced security and scalability. The protocol is also exploring the integration of liquid staking with NFT lending, enabling NFT holders to earn yield on their staked assets.

“Users receive a tradable derivative token, representing their staked investment, which can be traded or used like other crypto tokens. This approach addresses the typical liquidity challenge in staking, allowing users to engage in other investment opportunities without un-staking their assets.”

Founded in 2022, ParaSpace has grown to a $500 million valuation with over 340,000 users. It reached a peak total value locked of $900 million in May and merged with Parallel Finance in August.

Image by Freepik

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