Collectors of physical artworks will soon have a new way to tap into the value of those assets, thanks to a collaboration between AllianceBlock and Artbanx.
AllianceBlock said today it’s partnering with Artbanx on the creation of an upcoming decentralized lending platform that will make it possible for users to obtain crypto-based loans using their physical art as collateral.
The platform, which will launch later this year, will make use of AllianceBlock’s extensive DeFi architecture, including the Nexera ID system and the MetaNFT standard. Artbanx, which has created a platform for buying, selling and managing art, will soon offer a way for physical artworks to be transformed into digital assets. It will enable art owners to obtain crypto loans based on flexible terms and with transparent rates.
The companies said Artbanx’s lending platform will be fully decentralized, with a community of liquidity providers fronting the capital for the loans in return for stable yields based on their deposits.
It’s a revolutionary partnership that serves to bridge the gap between traditional finance and DeFi, offering a financial product that has never been available before. While art-based loans aren’t unheard of, they have always been on somewhat restrictive terms. With such loans, borrowers are required to hand over their physical art to a bank or specialist art lending company as collateral, and the terms of the loan and interest rates are generally inflexible. Uniquely with Artbanx and AllianceBlock, art owners will be able to secure a loan while maintaining full ownership of their assets.
There are clear benefits for liquidity providers too. They’ll be able to provide funding for loans knowing their capital is secured with a viable asset. Artbanx also promises more stable yield opportunities compared to regular DeFi, as the value of physical art assets is much less volatile than NFT-based digital art.
Artbanx said it chose to work with AllianceBlock because the company’s DeFi infrastructure is ready-made for such an offering. Therefore, it claims it has been able to develop its platform at a much lower cost and get it up and running far more quickly than would have been possible with legacy-based tech. It reckons it will be able to reduce time to market by 8 months, while its costs will be 70% lower, it said.
Matthijs de Vries, founder and chief technology officer at AllianceBlock, said he believes the art market is not only extremely lucrative, but also ripe for disruption with Web3 technologies. “This partnership is a great example of how our decentralized infrastructure can be used to create new financial products and services and realizes our vision of bridging the gap between TradFi and DeFi,” he added.
Artbanx said its new art lending platform is expected to launch in the “coming months”, with more details on the offering to be announced soon.
“This partnership is a prime example of how DeFi can be used to bridge the gap between traditional finance and the digital world,” said Artbanx co-founder, chief executive and chairman Mads Boie Thomsen.
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