Despite rebranding as Parallel Finance to focus more on the decentralized finance (DeFi) ecosystem, non-fungible token (NFT) lending protocol ParaSpace will continue to focus on its core product even amid the industry downturn.
Yubo Ruan, founder and CEO of ParaSpace (now Parallel Finance), explains in a conversation with Cointelegraph that the protocol uses a combination of multiple liquidity pools, dynamic loan-to-value ratios, and price discovery partnerships to mitigate associated risks. Due to high volatility, there are often not enough bidders for the underlying asset.
“Despite the market downturn, we believe NFT margin lending is still viable,” Ruan said. “It serves a niche but growing segment of collectors and investors looking for leverage with their investments.”
Over the past year, NFT trading volume has plummeted 99% compared to its peak in May 2022, but there are signs of stabilization with blue chip collections. “In the near future, we see NFTs being implemented as digital passports that can access both virtual and real-world utilities,” Ruan said. “We are also looking at the evolution of Soulbound tokens, which serve as non-transferable proof of experience, skills and reputation.”
Ruan said that as the protocol rebrands to offer a wider range of DeFi services, its two main focuses will be liquid staking and parallel L2. With the stated goal of achieving fast transactions with low gas costs, Parallel L2 integrates zero-knowledge proofs and Arbitrum Orbi to optimize security and scalability. Meanwhile, Ruan explained that the protocol is “exploring the possibility of integrating liquidity staking and NFT lending” so that NFT holders can earn returns on their staked assets.
“Users will receive tradable derivative tokens representing their equity investment, which can be traded or used like any other cryptocurrency token. “This approach solves common liquidity issues when staking, allowing users to participate in other investment opportunities without having to unstake their assets.”
Ruan founded ParaSpace in 2022. Since then, the company has grown to a valuation of $500 million and has over 340,000 registered users. It reached a peak gross of $900 million in May and later merged with Parallel Finance in August.
We are still working out of our SF office. I’d like to provide a quick update to our community. @ParaX_ai @ParallelFi
1. Parallel/ParaX is a dynamic brand. ParaX is now parallel (only the name has changed).
2. We apologize for the LTV confusion. It is changed!
3. Pudgy Penguins Oracle and LTV… pic.twitter.com/joHIepUXxh
— Yubo Ruan (@yuboruan) November 26, 2023
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