NFT collectors want to be able to leverage their NFTs for other financial means, whether that be on or off the blockchain. NFT escrow services provide a trusted intermediary to protect NFTs until agreed upon conditions are met (payment, services, trades, etc.).
The beauty of NFT escrow is that the “intermediary” is not really an intermediary at all. It’s a smart contract that executes the transaction automatically once the conditions are met.
One of the more interesting use cases of escrow in NFTs comes from the Alien Doge game.
Alien Doge’s NFT Escrow
Alien Doge will be launching their online game with an escrow service available to players in the pro version of the game. This will enable players to challenge one another to battle and wager their assets in a winner-take-all format.
Essentially, both players submit the asset they want to wager to the escrow and once the conditions are met (the battle is completed), the escrow releases the assets to the winner.
Although the game won’t be available in beta for another month, the concept is one I can’t wait to try out.
If you’re interested in hearing more about Alien Doge, in episode 5 of the NFT QT Show, we discussed 4 Projects Using NFTs for Arcades, Corporate Dividends, Peer Gambling, and leasing NFTs to TV Networks. Listen below:
Upon reading about the Alien Doge escrow service, I did some more digging to learn about other escrow services for NFTs.
Other NFT Escrow Services
There are many instances where the blockchain was used to replace an escrow service in a real estate transaction. For instance, here you can read about how Propy facilitated a house purchase in Ukraine using only a blockchain smart contract in 2017.
But what I’m particularly interested in is the ability to leverage or collateralize our NFT assets for other financial activities, and how an NFT escrow could facilitate this.
For instance, here are 3 companies bringing NFT Escrow Services to us:
- Collateralized NFTs – Pawn.fi allows users to take out a loan (in crypto or fiat) on their NFTs. Borrowers set the terms they’d like to receive on their NFT. Lenders on Pawn.fi can choose if they’d like to lend on those terms. Pawn.fi then codes this into a smart contract, holding the NFT in escrow until the principle and interest are paid off. If you wanted to get an 8 ETH loan on your Bored Ape (valued at 10 ETH, let’s say) so that you could make more NFT investments, Pawn.fi is the place to go.
- Transacting NFTs for Physical Assets – Smartlink uses smart contract escrow to allow people to transact NFTs for funds or goods without listing or going through an NFT marketplace. Smartlink collects the funds and NFT in a smart contract escrow, allowing both parties to approve they’re getting what they bargained for before executing the trade. If you wanted to trade a boat for someone’s CryptoPunk, Smartlink is where it’s at.
- NFTs On Loan – Polkalokr and Terra Virtua are using smart contract escrow to create an NFT lending service. They’re anticipating the business opportunity whereby galleries, museums, restaurants, and other venues may want to display other people’s legitimate NFTs. Escrow would allow a gallery, for instance, to essentially rent that NFT for a set period of time on set terms, while the owner would have assurance of funds and ownership of the NFT after the time period was over.
NFT escrow is going to do wonders in making NFTs legitimate assets that we can use to leverage for other financial activities. It’s how we bridge the traditional financial world with the emerging NFT world, creating assurances on both sides of a transaction.
Personally, I can’t wait to see someone use an NFT escrow service to trade their CryptoPunk for a multi-million-dollar mansion.
Looking for other visions of the future led by NFTs? Then look no further than The NFT Handbook.
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