The first borrower-focused NFT lending platform​

TLDR: New NFT lending platforms are emerging, of which, Astaria is the only one that focuses on the borrower's needs. With guaranteed loan and liquidation terms, competitive rates, and a top-tier user interface, securing an NFT loan through Astaria brings unparalleled peace of mind.Collection of loan offers ready to go.

"The age of the farmer is coming to an end, the age of the borrower is here" - Anon 2023

Introduction​

By putting the needs and interests of borrowers first, Astaria has redefined the lending landscape, revolutionizing the way individuals can leverage their NFT holdings. In this, article, we'll explore why Astaria is the most borrower-centric NFT lending platform and compare its features to the competition.

Loan Certainty

Astaria acknowledges that borrowers have the need for more surety with their open loans. With fixed-length and fixed interest rates, borrowers can rest assured, knowing their loan terms are solidly established from the outset. Astaria has also opted to eliminate forced liquidations, significantly reducing the anxiety associated with maintaining loans over extended periods. Users now only need to focus on paying down their debt before the loan's maturity and can comfortably disable their floor price alerts.

Competitive Terms​

A borrower-centric lending platform should prioritize fair and transparent terms. Astaria shines in this aspect, offering highly competitive interest rates and clearly defined loan terms. Ensuring that borrowers have access to the most reputable appraisers in the space, all vying for the best terms, sets our platform apart. While bespoke pricing per piece does occur on the peer-to-peer lending side, we've highlighted the drawbacks of this model's scalability in a previous article. We propose a solution that amalgamates the benefits of peer-to-peer and peer-to-pool, to escalate our product offering beyond either method.

Streamlined Borrowing Process​

Astaria provides a streamlined, efficient, and user-friendly borrowing process. The intuitive interface stands head and shoulders above the rest, reinforcing Astaria's emphasis on user experience. Borrowers can secure funds on the best terms faster than on any other platform, without any compromise.

Responsive Customer Support​

It often baffles how our industry can attract new entrants without offering support to users who may be stuck. Not at Astaria. If you use Astaria and are having trouble anywhere along the way, reach out to us on Discord, create a ticket and the team will be sure to help you. Our team is active on Discord and eager to help users.

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We are excited to announce the upcoming beta launch of Astaria, an innovative on-chain NFT lending platform designed to provide a seamless experience for DeFi users. Astaria's protocol features a unique three-actor model, which ensures instant liquidity, competitive yields, and dynamic loan terms. Before we dive into the platform's features, let's explore the details of our beta launch.

What to Expect for Beta​

Astaria's beta testing phase will consist of closed and open stages. During the closed beta, we will utilize the $LSD NFT collection created by our team to test the platform. Any holder of the $LSD NFT can borrow 0.1 ETH against their token during the closed beta, funded by Astaria. To participate, ensure you have provided your address to our team.

Holders of the $LSD token previously head over to our claims page to claim the eligible NFT. The important thing to note about the $LSD token is that will only be used as a testing token. Attached to the token is a community-based game. Winners of the game will have their bad trip $LSD turn into a good trip. See the following details about the game.

If you are interested in testing the platform and are not a holder of the $LSD token, reach out to the team on Discord to be enrolled in the closed beta.

Astaria’s closed beta will also feature a friendly competition between teams of borrowers. Users borrowing against their NFTs will be assigned to one of three groups: Darks, Lights, and Dithers. Teams score points through successful borrowing and repayment of loans. Dithers can choose between Darks and Lights, and the team with the most points at the end of the beta period will be declared the winner. Please see our docs for more details.

Beta Objectives​

The primary goal of the closed beta is to test the protocol's functionality with a trusted group in a low-stakes environment. Upon completion of the closed beta, we will transition to an open beta stage, inviting the broader NFT community to test our platform using mainstream NFTs.

We will actively monitor the protocol throughout the beta phase and encourage user feedback. Your input will be invaluable in refining and enhancing Astaria.

Launch features​

Astaria stands apart from other lending protocols due to its innovative approach and features tailored to the needs of the NFT and DeFi markets. Astaria's core features include:

1. Instant liquidity: No more time-consuming bid-and-ask negotiations. Choose from any (or multiple) loan terms for your NFTs offered by our expert Strategists.

2. Competitive yields and loan terms: Strategists compete for capital from liquidity providers and utilization from borrowers, ensuring both parties have access to competitive market rates.

3. No forced liquidations: Borrowers can only be liquidated if their loan expires with outstanding debt. Astaria eliminates forced liquidations on price changes, protecting borrowers from turbulent markets.

Roadmap features​

The Astaria team is hard at work extending the protocol to offer the best NFT lending experience on the market. Expect innovative new features such as flash actions throughout the coming months.

We are eager to embark on this journey with you all and look forward to the impact Astaria will have on the world of NFT lending. Join us as we revolutionize the NFT lending landscape with the launch of Astaria's beta.

Join us​

We are eager to embark on this journey and look forward to the impact Astaria will have on the world of NFT lending. Join us as we revolutionize the NFT lending landscape with the launch of Astaria's beta.

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The NFT lending market is inevitable, and any DeFi user would have predicted its rise after the 2021 NFT boom. This is a story of the NFT lending market — its start, challenges, and the path forward.

NFT lending expansion depends on fairer loans, support for other NFT types, and composable debt.

The path to NFT lending is challenging. The design patterns that make the fungible market work don’t apply to the non-fungible side — added to the fact that NFTs carry an intrinsic off-chain value that fungibles don’t. Each piece means something more to the holder. There is no standard, nor will it ever be easy to create a standard to value an NFT. Digital Art, PFPs, and community access tokens can have a floor price, but that does not consider what the NFT means outside of its traits and utility. It is never going to be easy to price a subjective market objectively.

Metrics like floor price, moving averages, or any other “pricing” methodology can work, but these are blunt instruments that are not designed for the market they operate in. Breaking the NFT lending space down, you are effectively asking if a borrower will pay back the loan terms, and if not, will the piece be worth the outstanding debt at the time of liquidation?

Peer-to-peer​

Before we jump into the new design space, let’s walk through the options available today. The first is a throwback to the barter system, where NFT lending is done through an OTC peer-to-peer process. Borrowers and lenders agree to terms, and a contract trustlessly handles the transacting. This process has the distinct advantage of allowing users to match terms in an isolated trade. The peer-to-peer model will continue to exist in the space as there will always be a need for a high-touch market for unique pieces.

The constraint to the peer-to-peer model is that both borrowers and lenders must agree to terms. A borrower will generally overvalue their piece, meaning they are more to the holder than a simple floor price. A lender will place a premium on their risk if they are unaware of the borrower’s credentials or concerned about the volatility of the piece’s value. This mismatch between the aggregate borrower and the lender’s sentiment leads to a lower clearing between the two parties.

Peer-to-pool​

If peer-to-peer is one method, the other alternative is to use a peer-to-pool model. While peer-to-pool has only recently started taking traction, it has distinct advantages over peer-to-peer — and a few drawbacks.

The advantage of peer-to-pool is that lenders no longer have to lend to each individual and instead can lend to a pool that handles the liquidity management. This offers a far less negotiation-driven process offering a better user experience for both borrowers and lenders.

The obvious next question is how the vaults know what terms to write for a specific piece. The answer is to find a particular valuation methodology. In the case of BendDAO, which uses appraisal services and bases terms on the appraisals. These methodologies can change over time.

Peer-to-pool also adds a collective risk to all LPs in a pool. Where peer-to-peer places an isolated risk on each loan, a peer-to-pool model naturally pools that risk.

While the risk of peer-to-pool is concentrated, it offers a far more advantageous scaling path. LPs earn yields similarly to the fungible market–add money to a pool and earn. Borrowers can access instant liquidity, and the tedious negotiation process is removed. Liquidity provider and borrower demand can scale as the market scales.

What’s wrong with peer-to-pool Highlighting the biggest flaw in peer-to-pool modeling: the valuation methodology. Any oracle-based price calculation method (like floor prices) can be manipulated. This is the hardest nut to crack in the NFT lending space.

The alternative is to get specialized appraisers. This removes the “flat” collection pricing issue and offers a more nuanced pricing methodology. Appraisers (like Upshot, NFTBank, NFTValuations) appraise based on their in-house subjective pricing algorithms. Their algorithms are typically machine learning based and give an expected value of what an NFT is worth even within each collection.

The appraisal system does not guarantee any piece’s price and is just as subjective to the model. Appraisers can value characteristics like traits, previous owner history, and a myriad of other data points to estimate a piece’s value.

At launch, Astaria will have competitive dynamics for each appraiser to ensure that their valuations’ terms balance fair terms for borrowers with the risk-return profile for lenders.

Summing up peer-to-pool vs peer-to-peer​

The Astaria protocol makes the conjecture that peer-to-pool will win out as the winning protocol design. I suspect both peer-to-pool and peer-to-peer will have distinct roles depending on users’ needs. Ultimately the scalability of peer-to-peer will always limit its scope to bespoke deals, while peer-to-pool, if designed correctly, stands a chance to be the protocol design that will unlock the future of NFT lending.

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The team is hard at work getting our product into shape, and we are pleased to share the latest developments.

At launch, we aim to provide instant liquidity for the top NFT collections with the easiest-to-use NFT lending process in the market, powered by our three-actor model. Let’s explore who the actors are and what they do.

Current NFT lending protocols use a bidding process where borrowers ask for terms, and liquidity providers can accept these terms. Today, we aim to demonstrate why Astaria’s three-actor model will be the easiest and most efficient platform to use. In future newsletters, we will explore the pros and cons of each design.

Borrowers and Liquidity Providers​

The borrower has the asset and wants to access liquidity on their NFT — the first actor. The liquidity provider has capital and would like to earn a yield on their funds — the second actor. The liquidity provider will add funds to a pool, and the borrower will borrow against their asset from the pool. So far, standard DeFi mechanics for ERC-20s.

The Strategist​

The challenge with non-fungibles is that they are non-fungible, and not every asset is treated the same from collection to collection or even within them. Therefore, writing acceptable loan terms for an asset is an art as much as a science. This is where we introduce our third actor, the strategist.

To be precise, there are segregated roles between liquidity providers and strategists, a separation between intellect and capital. The strategist writes loan terms for any piece or collection. The terms are based on their models and assumptions. Once a strategist has created a set of terms, the liquidity provider can enter a pool based on the given strategy.

Strategists will naturally try and outcompete other strategists for terms that are both attractive to borrowers and lucrative enough for LPs. Walking this tight rope while managing the risk is a fundamental part of what it takes to be a strategist.

Note that the role of a strategist in this system is to provide a term sheet for any number of NFT(s) and not a valuation. This distinction is necessary to understand why NFT lending differs from fungible lending. Each piece is unique, and the owner will most likely not want to lose their prized NFT — especially when the piece’s value differs from person to person. There is no “correct” valuation, and prices fluctuate.

How we are different​

Due to variable prices, we also had to design a term system that was not the standard floor pricing or Oracle-based approach. Instead, the terms written by the strategist are the terms that the protocol will use for liquidations instead of price. If you default on the terms (miss a payment or fail to pay down all debt at maturity), you risk losing your piece. But don’t worry; even if you fail to meet your obligations, you can buy back your NFT up until the last moment in an auction.

The key differentiator is that terms are based on a proxy of valuation — not the valuation itself. Making the liquidation process less price sensitive or prone to floor price manipulation. The system is also optimized for terms based on a more meaningful set of values rather than simple data points.

Providing liquidity to the system will be as simple as any epoch-driven vault. LPs can signal their need to exit the vault and will be able to in the next epoch, provided there is enough reserve. Since the strategist ensures the terms are as up-to-date as possible, LPs can set and forget liquidity.

What’s Next​

The team has set an initial launch date internally. The exact date will be shared closer to that time, with more updates and features in future newsletters.

If you think you are up to writing loan terms and have what it takes to be a strategist, reach out to us by filling in this form.

At launch, liquidity providers will be able to provide funds strategists from some of the most reputable appraisers.

Community Alpha​

We believe that web3 platforms live by their community. Be sure to keep an eye out for what we have planned for our community after the launch. Until then, we keep BUIDLing.

Follow us on Medium and Twitter for the latest details, and subscribe to our website mailing list for the latest updates.

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