Loan provider Rocket LP DAO issues the first of its kind $1000 loan backed by an ENS domain name as collateral.
According to the latest reports, Rocket LP DAO, a loan provider in the crypto space has issued the first-ever loan backed by an Ethereum domain name as collateral. The loan was issued to ENS director of operations Brantly Milligan against ownership of the ENS domain name Brantly.eth.
While Brantly will still be able to use the domain name, Rocket will have complete authority over it. However, in the case of Brantly’s inability to repay the loan, Rocket will be able to retain the authority of the domain name and remove Brantly’s access from it.
Rocket confirmed that it has issued a $1000 (around 6.5 ETH) loan to Brantly for a 90 days period at a 15% interest rate, backed by only one domain name Brantly.eth.
Rocket signs off the first ever domain name backed loan ⌨️?
— Rocket (@RocketNFT) April 15, 2020
Rocket usually issues loans with non-fungible tokens (NFTs) as collateral, which are ERC-721 tokens used to represent a physical or digital asset. In this case, it has represented the ENS domain name as the NFT.
Brantly explained in the post, “This is a great demonstration of how ENS names seamlessly fit into the fast-expanding universe of services that use Ethereum-based NFTs, one of the unique benefits of running a naming system on Ethereum.”
He went on to add, “As I mentioned earlier, I put up the ENS name Brantly.eth as collateral. Brantly is my first name and has great personal value to me, so I have a strong incentive to repay the loan, and first names are generally valuable.ETH names since they’re short, and there can only be one owner per name.
New Approaches of the Crypto Lending Sector
These new approaches by the crypto lending sector in the P2P space are indeed emerging as challenges to the age-old principles set by the traditional financial systems. However, some have expressed skepticism about the ability of tokens to value sentiments, especially in the context of Brantly’s reasoning to set the self-named domain as collateral.