Despite rebranding to Parallel Finance to focus more on the decentralized finance (DeFi) ecosystem, non-fungible token (NFT) lending protocol ParaSpace will remain focused on its core product amid industry woes.
In a conversation with Cointelegraph, Yubo Ruan, founder and CEO of ParaSpace (now Parallel Finance), explains that the protocol uses a combination of diversified liquidity pools, dynamic loan-to-value ratios and price discovery partnerships to mitigate the risks associated with the high volatility that can often result that there are no bidders for the underlying asset.
“Despite the market downturn, we believe that NFT margin lending remains viable,” Ruan said. “It serves a niche but growing sector: collectors and investors seeking leverage in their investments.”
Over the past year, NFT trading volume has declined 99% since its peak in May 2022, although there are signs of stabilization in blue-chip collections. “In the near future, we see the implementation of NFTs as digital passports that provide access to both virtual and real-world utilities,” commented Ruan. “We are also looking at developing soul-bound tokens that serve as non-transferable proof of experience, skill and reputation.”
While the protocol is being rebranded to offer a wider variety of DeFi services, Ruan said the two main areas of focus are Liquid Staking and Parallel L2. In addition to the stated goals of achieving fast transactions with low gas fees, Parallel L2 also includes zero-knowledge proofs and Arbitrum Orbi to optimize security and scalability. Meanwhile, Ruan explained that the protocol is “exploring the possibilities of integrating liquid staking with NFT lending” to enable NFT holders to earn returns on their staked assets.
“Users receive a tradable derivative token that represents their staked investment and can be traded or used like other crypto tokens.” This approach addresses the typical liquidity challenge of staking and allows users to participate in other investment opportunities without to repeal their assets.”
Ruan founded ParaSpace in 2022. Since then, the company has grown to be valued at $500 million with over 340,000 declared users. The company reached a peak of $900 million in May and subsequently merged with Parallel Finance in August.
We still work in our SF office. I just want to give our community @ParaX_ai @ParallelFi a quick update
1. Parallel/ParaX is a dynamic brand. ParaX is now Parallel (just a name change).
2. Sorry for the LTV confusion – fixed!
3. Pudgy Penguins Oracle & LTV… pic.twitter.com/joHIepUXxh
— Yubo Ruan (@yuboruan) November 26, 2023
Related: How can NFTs change daily life?
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