Financial market instruments are a means of accumulating wealth with market participants seeking products and services from intermediaries such as banks, insurance firms, and peer-to-peer ecosystems.
One of the most sought-after financial services is access to credit for investing in market instruments, commodities, and real estate, amongst other investments.
Notably, the credit extended to market participants comes with some significant risks, including foreclosure in the event of a default.
Foreclosure is the legal recovery process followed by lenders in instances where borrowers have defaulted on a loan. In most cases, foreclosure leads up to the liquidation of a borrower’s collateralized asset.
The foreclosure process cuts across all financial markets, including cryptocurrencies, with the only difference being its execution. In crypto, foreclosures have become especially common given the volatile nature of this market and the loopholes in Decentralized Finance (DeFi) and Non-fungible token (NFT) projects.
Foreclosure in the DeFi Market
With the emergence of nascent markets like crypto, the world is now being exposed to alternative financial products and services.
This market features a Decentralized Finance (Defi) niche where anyone can access financial services ranging from borrowing, lending, and staking digital assets to receive network rewards.
While still a young ecosystem, the Defi market has witnessed significant foreclosure events, with MakerDAO’s black Thursday liquidations featuring at the top of the list.
MakerDAO’s liquidations took place at the onset of the Covid-19 pandemic, which saw global markets tank by a multitude.
The bearish effects wiped out the crypto market capitalization massively, marking the popular black Thursday on March 12, 2020. Between March 12 and 13, MakerDAO’s liquidations had resulted in protocol losses of about 5.67 million DAI.
Meanwhile, the liquidations also offered an opportunity for bidders to buy the collateralized ETH at close to 0, with 36% being auctioned at this value.
That said, crypto market participants are waking up to the opportunities of purchasing digital assets at bargain prices by scouting foreclosures.
One area that seems to have captured the interest of most bargain hunters is the NFT marketplace. A new area of innovation that allows crypto users to create indistinguishable tokens to represent digital art, collectibles, and real-world assets, including stock indices and real estate.
An Opportunity to Buy NFTs at a Bargain
NFTs have become popular not only among the crypto community but across the creative industry. This type of crypto token has attracted participants from prominent industries, including sports teams and famous artists.
With the endless opportunities to leverage NFTs, crypto projects such as the Hoard Marketplace are taking the game higher. This is done by featuring an ecosystem where users can buy, sell, borrow and lend their NFTs.
Bargain hunters looking to get a piece of NFT cake at discount prices can use the Hoard Marketplace as their playing ground.
Essentially, one can lend their crypto assets to an NFT owner hoping that the borrower defaults and they receive the collateralized NFT as compensation. Alternatively, the NFT bargain hunters can scout for tokens that are being auctioned due to the borrower defaulting.
It is also noteworthy that the Hoard NFT marketplace offers NFT users an opportunity to access DeFi services.
This means that bargain hunters who have bought NFTs at a discount can also earn a passive income for staking their tokens within the DeFi ecosystem. In doing so, Hoard reduces the hustle of moving from one ecosystem to another in search of passive income.
Hitting the Jackpot with NFTs
NFTs have been making headlines for some time now as more people gain interest in their potential. The NFT market enjoys over 1% of the total crypto market cap. A significant amount of the total $1.3 trillion is currently deployed in the whole digital asset market.
Some prominent figures that have taken a keen interest in this niche include Dallas Mavericks owner Mark Cuban.
Speaking on the Delphi podcast in March 2021, Cuban mentioned that Mavericks are trying to find a good way of turning their tickets into NFTs,
“We want to be able to find ways so that not only can our consumers, our fans, buy tickets and resell them, but we continue to make a royalty on them.”
The NFT marketplace has been breaking records, with the latest being an NFT artwork that sold for close to $1 million within a minute.
This pace seems like it will continue as more enthusiasts realize the value proposition of NFTs in empowering creatives and decentralized markets at large.
While foreclosures in the crypto ecosystem may seem like a bad thing, bargain hunters can choose to view them as an opportunity. This perspective will expose them to discounted digital asset prices, including valuable NFTs that would have cost a dime. With so many emerging NFT marketplaces, the process has now been simplified as prospects can cruise across multiple ecosystems scouting for the best bargain opportunities.