In P2Peer lending protocols like NFTfi and Arcade, lenders and borrowers agree on loan terms (term, loan-to-value ratio, and APR) in a P2Peer fashion. Since the matching process is manual
(all parties need to agree on terms and borrowers need to approve loan proposals), liquidity times can be slow. The advantage of this is that the loan terms can be customized according to the user, without relying on price oracles. It is suitable for projects that
The benefit of NFT-backed lending is that debt positions can also be represented through NFTs, which can then be linked to other financialization protocols. For example, NFTfi promissory notes can be leveraged further or used as other forms of hedging strategies.