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NFT Lending on SharkyFi: How to guide

An easy to read how-to guide on NFT lending on Solana using SharkyFi

NFT Lending on SharkyFi: How-to guide

What is SharkyFi?

Sharky is a platform where anyone can make loan offers for NFTs in a collection, and holders choose the NFT, left-click-borrow instantly. You make money as a lender. You get cash on demand as a borrower.

Sharky brings financial tools to NFTs. Through a very well-developed product and an intuitive interface, today they lead the NFT Lending market at Solana and help solve the problem of illiquidity that we have in NFTs.

The founders of Sharkly are Anton (Restuta) and Rea. In this link, you can get more information about the team.

 

How does the protocol work?

The image above makes it easier to understand. You can interact with the protocol being a "Lender" or a "Borrower".

Borrowers can use any NFT from the collection to get a loan. And lenders bid on a mystery NFT from the verified collection.

If you are a Lender, just offer the amount of SOL for a certain collection.

If you are a Borrower, you can choose and accept the offer that suits you best.

After the duration of the loan, as a Lender, you get your SOL amount again (if the borrower repays) + a % interest. If the borrower fails to repay, you lost the loan but received the NFT from the borrower.

For more details, access their Docs.

 

What are the possible risks?

1- Smart Contract Risk

2- Defaulted / Foreclose Loans

A “default” occurs when the person who took your loan does not return the amount borrowed.

In this case, you will be in possession of the NFT that the borrower used as collateral.

A default can occur for several reasons, such as:

  • The person missed the loan end date/time;

  • The amount borrowed is greater than the current floor price. (Example: You borrowed 10 SOL and the NFT price is 9 SOL, so you may prefer to keep the amount in SOL instead of repaying the loan).

When you get a defaulted loan on Sharkyfi, you'll see how it looks in this image. By clicking on "foreclose loan", the borrower's NFT is transferred to your wallet.

In this image we can see that the floor of the NFT price is above the amount that was borrowed, so we had a “positive defaulted loan”. Then you have the option of listing the NFT at the floor price, if sold you would have a profit of 1.5 SOL

 

Can NFT liquidation cascades occur similarly to leverage trading tokens on exchanges?

Yes, and this can happen due to what we call Underwater Loans.

This occurs when the value of a loan is greater than the floor price of the NFT being used as collateral.

For example: If you borrow 10 SOL for an NFT that has a floor price of 12 SOL, and after a few days the value of this NFT devalues to 9 SOL, this is considered an “underwater loan” because the amount you lent is higher than the floor price of this NFT.

Imagine that for some reason the price of a certain collection suffers a very large price correction. This would affect all loans that are active at that time, potentially generating a large amount of Underwater Loans.

At the end of these underwater loans, lenders may want to list or liquidate these NFTs. This could increase the number of NFTs listed on the secondary market and affect their price.

To check information and data about Underwater Loans you can use free platforms such as:

Monkey Baby Business

Wolf Capital

 

Using Sharky - As a Lender:

As the platform is really very simple, it has no secret. In the Lend tab, you will see the collections that are available, the amount of SOL available in a certain pool, the best offer, the APY, and the duration.

You can use the filters to facilitate your search to find the offers that most interest you.

 

If you want to view the collections that offer the highest APY, just filter Descending. Currently, the highest APY on Sharkyfi is 360% and the lowest is 100%.



 

When you hover your mouse over a collection you can view an order book of offers. Where you can see the loans that are active and the offers that are active.

 

 

By clicking on a certain collection, you will be able to define the amount of SOL you want to put into the offer.

Through this tab, you can view the APY, duration, and the current Floor Price of that collection. You also get to see the current best offer.

When entering the amount you want to offer, the total interest is automatically calculated by the protocol.

Here you can also select from 1 to 3 offers to carry out in a single transaction.






Your Offers Section

To see your offers, just click on "Offers

On this page, you will be able to view and have better control over all the offers you have made in the protocol.

This section was recently updated and has very relevant information for the user.

You can see the Total Interest you've earned, the amount of SOL you have in Active Loans, the amount you have in Active Offers, and your foreclosure rate (defaulted loans). If you want, you can also download your entire history.

 

Through "Status" you can see how many days are left to finish that particular loan.

 

 

Clicking on "View" you can see more details. You also have the option to add it to your Google calendar to remind you when that loan ends.

 

 

Note: Sharky also offers more notification options, just click the bell icon in the menu to configure your notifications.














Using Sharky - As a Borrower

 

In the Borrow tab, you will see the collections that are available on the platform. The collections you have in your wallet will appear first in the list.

 

 

By clicking on "Borrow" you will be able to see the details of the loan. If you have more than one NFT, you can select more than one or all of the NFTs in that particular collection.

 

 

In the "Loans" tab you can view the NFTs you borrowed against.

Remember that if you want to keep your NFT, you must fully repay your loan by the end of the term.

You also have the option to extend your loan if you wish. This is a great option if you want to accept a new offer that is offering a higher amount of SOL.

If you extend your loan, it will be replaced by the new one you accepted, therefore the loan period will also be extended.

As we can see in the image, in this example, it is not worth extending the loan, as the new offer is for a smaller amount than my current loan.

In this case, it is only worth extending if you are nearing the end of your current loan and you do not want to make a repayment.










Some NFT Lending Insights

 

If you are already a more advanced user or want to lend more strategically, I recommend using this site: https://sharky.fi/beta/orderbooks

It is also a website developed by the Sharky team.

Through it, you have access to more details and filter options. It is also possible to analyze more platform data, such as Total Interest, Total Active Loans, Loans in 24h/12h, Active Loan Volume, and TVL.

 

By clicking on a collection you can see more details about the active offers, and it automatically informs you of the LTV (Loan to Value) of that specific offer.

Below you can see the loans that are active. It is possible to see the duration of each one of them, the amount of SOL, and the wallets that are carrying out that offer.

If, within your risk profile, you just want to make offers of up to 75% LTV, through this site you can quickly find the offers that suit you best.

 

If you want to avoid collections with a high amount of foreclosures/underwater loans you can use the filter to help you with that.

 

Checking your position on Step Dashboard

 

When making a loan on Sharkyfi, you can monitor it through the StepFinance Dashboard in an easy and practical way. 

 

The dashboard shows you the collection, the amount borrowed, and the time left until the end of the loan. This makes it easy to monitor your NFT loans.

 

Conclusion

Sharky is currently the largest NFT Lending platform that we have at Solana, currently, they have an average of 97% market share. The platform has already proven to be reliable and currently delivers a very good revenue share for its holders.

Among the available platforms, I strongly believe that they possess the friendliest and most intuitive interface out of all. This greatly facilitates the onboarding process for new users embarking on their NFT lending journey.

Sharky stands out among other platforms, showing its strength, and the future holds a promise of even more innovations and benefits for its holders.

The NFT lending market on Solana is poised for significant growth and development. Increased competition will prove beneficial as platforms continue to introduce exciting updates and rewards for their users.

Twitter: https://twitter.com/SharkyFi

Discord: https://discord.gg/sharkyfi

Docs: https://bite.sharky.loans/

None of the projects presented in our newsletters are financial advice. Our mission is to present and analyze protocols that are present in our ecosystem. DYOR always.