Before the second year of the coronavirus pandemic comes to an end, cryptocurrency exchange platform Kraken has issued various announcements indicating the innovative direction the company will take in 2022 and beyond. Kraken is jumping into the non-fungible token (NFT) sector, but it aims to provide more than just a trading marketplace.
If you hold valuable NFTs and deposit them into a Kraken account, you will be able to use them as collateral so that they can take out loans. The company also announced a brand new fiat gateway to the U.S., and an investment fund called Kraken Ventures. In an interview with a major financial news outlet, Kraken CEO Jesse Powell outlined several reasons Kraken is making waves as a crypto exchange in particular, and his is not the only crypto exchange experimenting with its own token-based exchange platform.
The crypto lending market is still in its early stages, but the need for platforms that enable crypto lending is greater than ever. With over half of crypto exchanges out there now offering their own NFTs, it is possible that we will see additional crypto exchange platforms launch NFT markets in the coming months.
The NFTs are a game-changing technology because they are digital assets and digital ownership rights that can be transferred and traded without the requirement for crypto mining and transaction fees. NFTs can also be created on top of existing token platforms. This means that NFTs can be built on any DAPPS that use an ERC-20 or ERC-721 token.
Kraken’s new NFT offering is an ERC-20-compatible stablecoin called the “Kraken Crypto Asset.” It is backed by one USD and a stable $1 exchange rate to prevent its value from fluctuating. Its value is tied to the U.S. dollar. There will also be an additional stablecoin called the “Kraken USD Coin” which will be tied to the U.S. dollar and backed by a special fund of U.S. dollars. Kraken’s NFT platform is similar to DAI, which is a non-fungible token issued by Circle. DAI is used as collateral to provide loans to users, and this appears to be the business model that Kraken will be following as a new commercial lender.