First Ever Domain Name Loan by Smart Contract Was Executed on Ethereum
History was made on Saturday when the first ever loan against a domain name was executed with a smart contract on the Ethereum blockchain. The significance is that the success marks the birth of a new asset class that can be leveraged to unlock capital for business owners or domain name investors in an expeditious and secure manner.
deBanked founder Sean Murray was the executor of the transaction. The process involved tokenizing a domain name (domainfi.net) into an NFT and then offering that NFT as collateral on an NFT loan marketplace. When a loan was executed on the platform with a smart contract, the domain name was automatically placed into an ethereum address to be held as escrow. If the borrower were to default on the loan, the smart contract would automatically release the domain name to the lender, who would now have full control of it.
The process involved two parties, the tokenizing registrar and the NFT loan marketplace. The loan, which was consummated for proof of concept, carried a 10% APY and a 7-day term. It took less than 20 minutes combined to complete the tokenization and loan execution process.
“I was guessing that this capability might still be another year away and I had not even dreamed that I would be the very first one to execute this type of loan,” said Murray. “Following this space closely probably contributed to that stroke of luck. There is still time until this is ready to be a consumer-facing product in the marketplace, but the tech already exists and transactions of this nature are already viable. It will be fascinating to watch.”
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