Introducing: NFT Rentals on Flowty
Before we proceed, we want to remind you that using flowty involves risks and can have adverse outcomes for Borrowers, Lenders, Owners, Renters and other platform participants. The following is not financial advice, and we ask and encourage you to consult a qualified financial advisor and tax expert to understand the full implications and consequences of using flowty.
Since we launched in February 2022, one of our primary goals was building out support for NFT rentals. As NBA Top Shot and general Flow blockchain NFT collectors ourselves, we are intimately familiar with the benefits that NFT rentals can offer to all ecosystem participants. In addition, many of flowty’s users have shared with us that they would love to see flowty add a rental feature.
With that backdrop, we are excited to introduce NFT rentals. A primer follows and we have also published a rental-specific FAQ.
How it Works (simple version)
Flowty now supports collateralized rentals. NFT owners can rent out NFTs for a fee. The Renter is responsible for putting up a *Refundable* Deposit at the time of rental. If the rented NFT is not returned on time, the NFT owner receives a deposit (amount set by the owner at the time of listing) instead of the NFT.
- NFT Owner sets rental terms:
- Rental Fee
- Refundable Deposit
- Duration (Rental Term)
Owner can use the Private Listing feature to only allow a specific wallet to rent the NFT, which may be helpful for groups who are pooling assets!
2. Rental listing is added to the marketplace
3. Renter rents an NFT by selecting a marketplace listing and submitting the rental fee + refundable deposit
4. NFT owner receives rental fee (net of flowty fee + royalty) and refundable deposit is held in a smart contract
5. Renter takes full ownership of the NFT (with the refundable deposit acting as an incentive for the return of the NFT within the term of the rental)
6. If Renter returns the NFT (must be the same exact NFT) within the rental term, the Renter receives refundable deposit back
7. If Renter fails to return the NFT by the end of the rental term, the NFT Owner keeps the deposit (after royalties)
8. There are no further ramifications to the Renter (no credit score or other rating system that would impair a Renter’s ability to rent, lend or borrow on flowty again in the future) — the Renter simply forfeits the refundable deposit
Use Cases for Rentals (Renters)
The primary benefit of rentals is the ability for you to reduce risk and financial exposure while still participating in the various aspects of your favorite NFT platform.
While we know the flowty community will come up with many ways to use our newest feature, we have outlined some specific use cases here:
1. NBA Top Shot Challenges
One of the most exciting aspects of NBA Top Shot is challenges. Set-based challenges and flash challenges are core features of the platform. Many users enjoy completing challenges for the rewards, profit potential or both.
Often, challenges require moments that a user may not want to actually own or may not want to take on the risk of buying during a challenge without knowing how far the moment may fall after the challenge.
Renting allows users to complete a challenge at a predetermined fee, without worrying about the value of the underlying asset or transaction fees after a challenge is completed.
Remove the uncertainty, keep the fun.
2. Temporarily Increase “Top Shot Score” or Other NFT Platform Collection Measure
To qualify for pack drops or other aspects of the NBA Top Shot platform, users may need a minimum Top Shot Score (learn more here). It is not viable for all users to constantly maintain a Collector Score above a certain level. Some users may not want to acquire assets (and either hold or be forced to sell and absorb transaction fees) just for the purpose of reaching a minimum Top Shot Score. Instead, users can rent high Top Shot Score assets to help them reach the minimum needed score.
3. Complete Sets on a Temporary Basis
Whether a user wants to join NBA Top Shot’s Nine Lives Lounge (Cool Cats set holders) for a few months or complete a set because there might be an upcoming airdrop, users may want to own a complete NBA Top Shot set on a temporary basis, without taking a risk on the value of the underlying asset(s) that they are missing.
Rentals will allow users to temporarily complete sets for a predetermined fee set by the asset owner. Renters take no risk on the underlying asset, yet are able to access the full benefits of a set holder.
4. Temporary Ownership of Utility NFTs
Want to rent a Ballerz for the championship game or rent someone’s annual concert pass to see your favorite band in your city? Now you can.
Some bands / artists have released lifetime or annual NFTs. If you own the NFT, you can attend any of the band’s concerts or shows over the relevant time frame. An owner may not be able to or want to attend every single event. Being able to rent NFTs allows such an owner to monetize an idle asset and allows a renter to pay the owner for a unique experience. A win-win for the community.
As another example, many projects have games or contests in which collectors create a team or a lineup to compete with others. Introducing a rental system allows users to limit financial exposure to a single NFT collection while still fully participating.
5. Group Challenge Completions
A group of collectors can use flowty’s rental platform to complete a challenge together. One member of the group can rent assets from each other member (allowing other members to collect rental fees for their contributions) and complete the challenge.
You no longer have to rely on trust to help each other complete challenges. If a user does not return your asset, you will receive the refundable deposit instead.
6. Other Use Cases
Our goal is to build tools for the community. In the same way that the community has come up with interesting use cases for flowty’s P2P collateralized NFT loans feature, we expect the community to find many more use cases around rentals that we have not contemplated. We are excited to see how people use the new feature.
Use Cases for Rentals (NFT Owners)
The primary use case for rentals from an NFT owner’s perspective is the ability to monetize idle assets in a *safe* way.
NFT owners often encounter situations in which they would want to rent out assets, but until now there were no safe options to do so. Historically, owners have had to trust renters to return assets once the rental period is complete. Even if a renter is not malicious, something may happen to the renter that makes him or her unable to return an asset.
The following are some situations in which an owner may benefit from flowty’s rental feature:
- You own a stack of NBA Top Shot moments that qualify for a challenge and you do not want to sell the assets (monetize without selling)
- You own a stack of a bottleneck for a set on NBA Top Shot and other users want to own a set on a temporary basis
- You own premium assets that can be rented out for the purposes of Top Shot Score accumulation in advance of a drop
- You own an NFT that offers utility and would prefer to rent it out to someone else who can take advantage of the utility
- You do not want to sell your NFT but there is demand from others who want to own your assets on a temporary basis
- You want to help a friend or your community in a safe way — use our private listing feature to make a rental listing that only a specified wallet can rent!
And many other situations that our users have already brought up to us!
As we have promised since Day 1, we will continue to build tools and features to enhance the collecting, investing and building experience on Flow. We hope that you are excited about our new core feature and welcome any and all feedback on how we can improve the feature to better suit your needs.
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