NFTs are the next promising trend in the world of DeFi.
It helps to expand the market of collaterals in DeFi lending. In fact, a DeFi lending and borrowing platform requires collaterals. These collaterals are generally the crypto-holdings. With the introduction of NFT, one can now put other types of assets as collateral. For example, an artwork or a real-estate property can be tokenized as NFTs and put up as collaterals.
The use of NFT goes beyond the realm of collaterals. It has the capability of representing more complex financial products. These products can be insurances, bonds, or options. In insurance, each contract is converted into NFT. These NFTs can be traded on a secondary market. Another DeFi model that has been adopted in the world of NFTs in the issuance of governance tokens. Many platforms and NFT marketplaces have started issuing and distributing their governance tokens.