Looking to explore lending opportunities in the booming world of NFTs? It’s something I have my eye on in 2024. I learned throughout my time in NFTs that people love leverage. While I don’t agree (see my book, The NFT Survival Guide for more on why I don’t use debt to buy NFTs), it might be an opportunity for you.

The industry standard for NFT loans (both borrowing and lending) is NFTfi, which provides a marketplace platform for lenders to offer wETH or DAI to borrowers against their NFT collateral.

This step-by-step guide will walk you through the process of becoming a lender on NFTfi and earning interest on your assets.

Step 1: Making an Offer

To kickstart your lending journey, simply navigate to the homepage of NFTfi and click on the "Lend" button. Alternatively, you can access the "Collateral" option from the main navigation menu but again, it’s not what I would do.

Step 2: Selecting NFTs

Browse through the various collections and NFT assets available on the platform. Choose the NFT you wish to lend against and click on it for more details. Here, you want to select a collection that has NFTs that you’d be interested in owning. That’s because if the borrower defaults on the loan, you’ll be left with their NFT…so choose wisely.

Step 3: Placing an Offer

Ready to make an offer? Once you’ve found the ideal NFT you’d like to lend again, click on the "Make offer" button to initiate the process. You have the flexibility to adjust the loan terms according to your preference or stick to the borrower's desired terms.

Step 4: Granting Permission

If you're a new user making your first offer, you'll need to grant permission to access wETH (or DAI) from your wallet. This is a one-time process, ensuring a smooth experience for future transactions.

Step 5: Confirmation

Confirm the permission request in your Metamask wallet and proceed to sign the transaction. Note you’ll have to pay a gas fee for this transaction, so it might make sense to time it right using a gas tracker tool like ETH Gas Now.

Step 6: Notification Preferences

Opt to receive email notifications for offer acceptance by filling out the email field and saving your preferences. You can also monitor notifications directly on your NFTfi account if you’re not comfortable sharing your email address.

Step 7: Congratulations!

You've successfully made your first loan offer. Sit back and wait for the borrower to accept your terms. Upon acceptance, the borrower's NFT will enter an escrow smart contract, and you'll transfer the funds as agreed.

Step 8: Managing Offers

You have the flexibility to update or revoke your offer at any time until it's accepted. If the borrower repays the loan, you'll receive the funds immediately with no further action required.

Step 9: Foreclosing a Loan

In the event of borrower default, you have the option to foreclose the loan and claim the NFT collateral. Just visit the asset page and click on the "Foreclose loan" button to initiate the process.

What do you think? Will you use NFTfi to start lending out ETH? It might be a good long-term strategy if you believe in NFTs!