In Peer-to-Peer NFT lending, NFT owners can pledge their NFTs as collateral to obtain loans directly from another individual. Borrowers can list NFTs that they want to borrow against. Lenders place bids by offering loan terms — loan amount, loan duration, and interest rate. When the borrower accepts an offer, the NFT is transferred to an escrow contract, and the loan amount is dispensed from the lender to the borrower. The borrower can repay the loan plus interest at any time before the expiry date to get back the NFT. If the loan is not repaid on time (a default), the lender can foreclose on the loan and obtain the escrowed NFT.
Peer-to-Peer lending products match borrowers and lenders, functioning as a middleman. NFTFi is the oldest and leading platform for Peer-to-Peer NFT Lending.