Technical Details - Leverage Buy of NFT

One of the main bars to entry for retail users into the NFT market is the high price of NFT items, especially blue-chip NFTs such as CryptoPunk, BAYC etc. A great way to lower such a bar is through leverage buy.

Leverage buy on an NFT is similar to mortgage on a house. The current credit (i.e. the available amount of borrowing that is enabled by existing collateral) will be considered in conjunction with the additional credit that the leverage buy targets would bring, such that even though the total borrow amount should not exceed the current credit plus the extra borrow credit from collateralizing the leverage bought NFTs. This result in the calculation of credit limit as following:

The leverage buy transaction will be facilitated through flashloan. Specifically:

  1. User defines the items of NFT he intends to purchase through leverage buy. Note the items have to be listed with “Buy Now” prices which will be the transaction prices through the leverage buy function;

  2. A flashloan of ERC20 tokens will be originated from Parallel platform, and the borrowed assets are then used to purchase the list of target NFTs at their “Buy-Now” prices.

  3. The acquired list of NFTs will be deposited and collateralized on Parallel platform.

Without mortgage as a product there would not be a housing market. We believe the launch of leverage buy will bring a wave of momentum to the NFT market, and open the door to a list of innovations to the NFT-Fi sector.

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