4.1 Low-collateral NFT lending protocol

AFKDAO plans to build an algorithmic, autonomous interest rate lending protocol similar to Compound Finance but for mainstream game assets and can go without the need for over-collateralisation.

NFT owners will be able to stake their assets at any time into the pool and instantly receive dynamic interest while getting access to indefinite players who are borrowing at a dynamic interest rate at the same time. With the delegator, owners would only be lending the access to utilizing the NFTs but not the ownership itself. The amount and frequency of interest accrued are subject to the demand for loans, the minimum ROI, and the algorithm for accrued interest. Due to the nature of games, billing cycle rules may be applied to withdrawals like T+1 or more.

To take a loan, borrowers will have to inject an optional amount of reward tokens as per pool (eg. $SLP for Axie pool, $GEAR for PlaceWar) as the collateral. The delegator smart contract will automatically distribute revenue back to the lending pool for redistribution purposes. The collateral will be used to compensate lenders for any discrepancy between the total revenue generated within a billing cycle and the minimum return allowed. The minimum return will be determined by DAO governance at the very early stage but will later be regulated by the NFT oracle.

The NFT oracle is an oracle specializing in NFT-related data feed that AFKDAO plans to develop. The oracle will be designed to be capable of feeding more sophisticated data than only the floor price of NFTs, but a weighted average price estimation based on a basket of factors including floor price, average price, or average ROI from P2E over time for game assets.