Regardless of the chain, paribus ought to be the first crypto project that comes to mind when discussing lending and borrowing between NFTs. In order to provide Cardano with liquidity, the platform has set itself up in this manner. You should be aware that this does not imply creating silos and segregating themselves from other ecosystems. With Milkomeda’s expansion into Non-EVM chains, Paribus is currently live. Paribus should therefore come to mind whenever someone considers NFTs and other uses for them outside selling them. This is something that the Platform is already working toward.
The fact that Paribus deals with synthetic and NFT assets in addition to native assets is one of the numerous factors that attracts crypto aficionados to the platform. However, it is incredibly interesting to watch what Paribus is doing in the crypto realm given that the NFT field is still somewhat of a “wild west.”
PROMOTING UNIQUE CRYPTO ASSETS
In essence, Paribus is a platform for borrowing and lending. It supports conventional cryptocurrency assets. With this, Bitcoin, ADA, and ETH can be used as collateral, but what distinguishes Paribus is the protocol’s support for NFTs, Metaverse lands, LP Tokens, and Synthetics, which are classified as Exotic Crypto Assets. As a result, you might borrow against these assets, and the platform’s valuation is based on artificial intelligence rather than P2P. Therefore, if there is liquidity, you can access money immediately away without having to sell your asset entirely.
Paribus is dealing with NFTs and synthetic assets, which raises the question of how these processes function given that the platform is not P2P. Understanding how Paribus is set up to operate from the perspectives of lenders and borrowers with relation to AI-based NFT values can help us respond to this topic more effectively.
NFT VALUES BASED ON ARTIFICIAL INTELLIGENT
Paribus stands out in this sense since they can instantly appraise NFTs and other unusual assets without having to engage in P2P transactions. Simply put, it means that you don’t have to wait to value my NFT for me and that I don’t have to come to you.
The NFT valuations on Paribus’ systems are now performed by roughly 5 partners. The next step that Paribus takes is to sort of aggregate all the data being sent in, after which they develop an algorithm to say, “These are the 5 data sources that they (Paribus) have received and this is how much valuation they (data sources) think this NFT is worth.” Then, Paribus will make their own calculations based on this information and provide you with a Paribus-Based valuation. If you approve of this valuation, you can immediately take out your loans.
This is because there is no need to reach an agreement if there is liquidity available. For example, if you want to take out a loan in USDC, the Paribus protocol has an underlying liquidity of pools. If USDC is available, you can just take it out right away. Compared to P2P, this has a very large scale.
Of course, these systems have flaws, but the essential point is that Paribus may offer 40%–50% Loan to Value Ratio (LTV) on NFTs, allowing you to borrow up to 40%–50% of the NFT value.
LOAN-TO-VALUE RATIO AD HOC (LTV)
The Paribus protocol must be protected because NFTs are not very liquid, they are subject to volatility, and it is a very young market. For these reasons, Paribus is being extremely cautious with these percentages. These factors are essentially what cause the Paribus LTV (Loan-to-Value ratio) to be low, but the Paribus team may raise this ratio in the future as the AI becomes more valuable and as liquidity in the NFT market as a whole increases.
DEMAND FOR QUOTE
The ‘Request for Quote’ is a recent thing being worked on by the Paribus team. For significant trading, this is used indexes. Let’s imagine you have $1 million in Ethereum and wish to purchase something else when discussing conventional assets. Due to the fact that it is decentralized, slippage has historically been an issue even with other DEXs.
Request for Quote is a widely used concept in the traditional finance industry. It occurs when you declare your valuation and need a loan, leading you to submit the “Request,” which is essentially an On-Chain write-up onto a smart contract to acknowledge the terms you are willing to receive or give for the quote. The loan will therefore be immediately completed if someone on the other side is a Take-Up and has the money to pay it back. Request for Quotes are essentially P2P transactions, except they happen on a big scale. Lender and borrower can reach an agreement without being hindered by the issue of gas slippage since it eliminates their friction.
The most important point to remember in this context for Paribus is that instant valuation is difficult for many platforms to accomplish. Once Paribus collects all of this data (as previously mentioned), the Paribus back-end and protocol as a whole will be able to provide it as an API service to any other platforms that wish to use NFT valuation. Therefore, it will be simple to plug into only Paribus and Paribus will offer you the same data without requiring you to worry about each provider on the move, rather than integrating or plugging in with numerous recent or upcoming alternative NFT valuation platforms.
DISCOVERING, CAPTURING AND ASSESSING NFT COLLECTIBLES
An NFT collection must go through some form of filtration procedure before Paribus can support it. Right now, a specific methodology is used to carry out the Paribus filtration procedure. For instance, Paribus will add a new NFT to its whitelist so that it can be accepted as collateral if it has a lot of supporters, a lot of market liquidity volume, a lot of unique holders, and other criteria are met. This is the initial action.
Over time, it will become obvious that Paribus will outsource this process to the general public, in particular the PBX holders — who are effectively the DAO’s main decision-makers — as the Paribus team would prefer not to be a centralized team in the long run.
Given how dynamic the process is, Paribus isn’t currently focused on developing a universal approach or set of standards to say “this is worth this much, that much, etc.” in regards to the Whitelist of collections. For instance, you might have an NFT collection with 100,000 ADA volume in 24 hours, but if you examine the actual collection and volume trade, void data results from wash-trades, thus it wouldn’t be appropriate for the protocol. Furthermore, because flow prices are easily altered, looking at them is not a viable option. Due to this tendency to keep things dynamic, Paribus looks at a lot of data points, keeps its attention there, and bases choices there.
SUMMARY
With Cardano, Paribus platform was able to create a blockchain that adhered to the fundamental ideas of what a blockchain should be. The Paribus team selected a system with scalability and interoperability capabilities from the start. The team firmly believes in the principles underlying Cardano and the potential of the blockchain. They select Cardano as well because they respect the benefits it offers and want to have the choice and flexibility to be multi-chained.
ABOUT PARIBUS
Paribus is a cross-chain borrowing and lending protocol for NFTs, liquidity positions, and synthetic assets, building for the Cardano blockchain.
FOR MORE INFORMATION
Official Website
https://paribus.io/
TWITTER
https://twitter.com/paribus_io
TELEGRAM
https://t.me/paribus_io
MEDIUM
https://medium.com/@paribus_io
DISCORD
https://discord.io/paribus
