The Polygon-based Defi platform, Teller, has recently launched a lending protocol which allows users to buy NFTs on loan and pay what they owe over time. This is called “Ape Now, Pay Later.” This new protocol allows users to purchase on credit a non-fungible token from a collection of “blue chip” projects and pay for it later.
The founder and CEO of Teller, Ryan Berkun believes that this service will provide NFT enthusiasts with access to aided financing to buy some of the blue-chip NFTs. Blue-chip NFTs like Bored Ape, Mutant Ape, Adidas Originals: Into the Metaverse, Doodles, Meebits, and Azuki. In a published report by Teller, it is stated that the feature will cater to those who wish to buy NFTs but don’t have the capital readily available.
Teller in execution also offers a lock-in-price feature. This feature locks the price of a particular NFT at the exact point in time, all through the transaction process. The purchase price is made static for the users once the escrow has been initiated.
How Does Teller Work
To buy on credit, an initial payment has to be made. This initial payment is 25%-50% of the purchase price. To know the exact price to pay, there is an algorithmic formula put in place. From this, users can select an NFT from an available collection on Open Sea where they are matched to those that would lend to them. The already paid down-payment covers the user’s part of the purchase cost while the lender pays the remaining amount. The whole transaction is conducted in an escrow wallet and it is until the user pays the lender in full the NFT gets transferred to the user’s wallet. In situations where the user does not pay back the loan as agreed upon, the lender is allowed to claim the NFT from escrow and sell it.
In terms of repayment, there is a fixed time that buyers need to pay back the loan. The loan ought to be paid back within 90 days with at least 1 minimum payment every 30 days together with the interest incurred within that period. The only formula to know the minimum payment is “minimum payment = (Principal/ duration lapsed) + interest Accrued.” The failure to meet up with this puts the user at the risk of their NFT escrow being frozen and then liquidated to pay back the lender due to a breach of their agreed terms.
And once the loan is paid totally, the NFT is transferred to the user’s wallet.
These are the current NFT collections offered as part of the Ape Now, Pay Later program byTeller:
- · Bored Ape Yacht Club
- · Mutant Ape Yatch Club
- · Moonbirds
- · Doodles
- · Cool Cats
- · Azuki
- · Meebits
- · Addidas Originals: Into the Metaverse
- · RTFKT-MNLTH
- · Murakami Flowers Seed
Increasing Popularity of Borrow Now, Pay Later (BNPL) Programs
In recent years, there has been a significant increase in the number of BNPL programs in the crypto space. A lot of retailers and brands seeking to offer lucrative and flexible ways to make online purchases have adopted this program and are making it mainstream. From 2018 till now, it has been established that the number of BNPL users in the United States alone has been increasing by over 300% per year with about 45 million active users in 2021 who have spent more than $20.8bn.
Finders have also established the fact that about 37% of Britons use BNPL services, with Klarna ranking as the most popular platform used.
One of the two major investors is Animoca Brands and OpenSea.
