In an effort to bridge the gap between the traditional art market and new digital asset classes, lending start-up Arcade announced Wednesday that it has raised $15 million in Series A funding to develop its platform in high-value-funding, non-fungible tokens, or NFTs.
Funding came from eight investment firms, including Pantera Capital, Castle Island Ventures and Franklin Templeton Blockchain Fund, as well as angel investors Zac Prince, CEO of BlockFi, and Richard Ma, CEO of Quantstamp. The proceeds of the $15 million funding will go to building the Arcade platform.
Founded in 2020, Arcade is a lending NFT marketplace that independently assesses, validates and regulates NFT pools that enables high net worth NFT holders to use them as collateral for loans. Arcade co-founder Robert Maciello said in an interview with ZDNet That platform for both borrowers and lenders. “If you own high-value NFTs, you can borrow against the fair value,” he said. “We support about 45 to 50 different combinations of NFTs, so it’s for the NFTs that have some value against them.”
On the flip side, Arcade allows people to become lenders, allowing those willing to lend capital to people looking to borrow against their assets. These transactions are transmitted to a smart contract platform on the Ethereum blockchain, which is fully compatible with all ERC20 tokens, including WETH, USDC and DAI. “We are a non-custodial platform,” Maciello said. “We have no access to anyone’s assets or any of the funds being exchanged. We charge a service fee to provide this smart contract system, but it is basically a dishonest escrow platform on Ethereum.”
Over the past few months, Arcade has generated about $3.5 million in loan volume in a “special edition” but has plans to open to the public in January. Masiello noted that Arcade was open not only to multi-million dollar NFT collectors and institutional lenders but also to Decentralized Autonomous Organizations (DAOs) – a type of open source code-based venture capital fund without a management structure or board of directors. “We had a mix of different components and people using the platform on the lending side, and on the borrower side, the primarily high net worth NFT collectors who didn’t want to sell their assets, they wanted to put them in the money and they take the proceeds from these loans and reinvest them in NFTs, decentralized finance, and other forms of cryptocurrency and financial products without having to sell their assets.”
One of the unique features of Arcade is its use of the Wrapped NFT technology. This proprietary technology allows multiple NFT assets to be pooled and used for a single loan, allowing for larger loans and greater liquidity. According to the company’s press release, Arcade will also enable developers to build on top of the platform, and support broader use of the new digital asset classes.
NFTs are perhaps one of the most misunderstood digital assets that have emerged in the blockchain space, with many under intense pressure to define what they are. Simply put, they are unique units of metadata and identifying tokens that reside on a blockchain, like Ethereum, and cannot be replicated, like fiat currency or Bitcoin. They are usually in the form of digital files such as photos, videos, computer-generated artwork, and audio clips. These files can be “encoded” so that they can be safely bought, sold or traded, and thus can be monetized. put another way; Many NFTs are the digital equivalent of a priceless work of art. Think of Da Vinci’s Mona Lisa. Although the Mona Lisa can be reproduced in various formats, there is only one true Mona Lisa.
But NFTs are more than just a digital artwork. It can take the form of digital products, from luxury brand fashion and collectibles to real estate and online gaming. Masiello notes that Arcade supports any NFT, whether it’s digital collectibles or avatars in game assets. “I think the world of what NFT will be in the next five years is going to continue to expand and spread. Everything can be NFT or some kind of NFT connected to it, but the angle of art is very connected to people because we understand that art can be bought and sold and that it has this origin attached to it. We are making a financial benefit that previously existed for art, but now this universe for us of what can be borrowed and loaned is just so much more than just art. It’s an entirely token standard for NFT.”
Arcade’s $15 million fundraising may be a small initial step, but with the help of its financiers who see the potential expansion of the NFT market, it can prepare for a giant leap into a borderless digital economy. “We will continue to recruit and add to the team,” Maciello said, noting that he and his 13-person crew will continue to build products, add to the team and enhance marketing efforts. “We believe Arcade will act as a gateway to the financialization of the NFT concept, which will effectively address other types of products beyond just a peer-to-peer lending platform. We are trying to make our platform similar and also innovative as leading companies and crypto companies but with a focus on NFTs.”