Pawn Bots is an NFT project from HiFi, a Utah-based company focused on a cryptocurrency lending protocol.
HiFi says that with Pawn Bots, set to launch in the next few months with a run of 8,888 NFTs, holders will be able to instantly borrow against their Pawn Bots.
pawn robots wrote in their official blog on Medium that Pawn Bots is founded on “four B’s: Build, Borrow, Buyback, Burn”.
If those last two Bs sound interesting, it’s because HiFi has promised to buy back any NFTs in the collection at mint prices within 24 hours of the reveal, and the royalty funds from secondary market sales will be used to burn the floor of the NFT the compendium.
Burning an NFT effectively removes it from the collection. Any Pawn Bots that are used as collateral with holders who cannot repay what they have borrowed will also be burned, says Noel Lopez, HiFi’s marketing director.
“This leads to a decrease in the supply of NFTs for the people who hold them,” Lopez says.
He adds that the company will likely lend a percentage of the NFT, not the full value of it, as values can fluctuate. This percentage, as well as the price of the Pawn Bots, have not yet been announced.
At first, Pawn Bots will be the only NFTs to lend through HiFi, but there is a future where HiFi will allow NFT owners of “blue chip” projects to take out loans against their NFTs. Unlike the loan from a bank, which goes through a credit check and must be approved by the bank, the NFT loan will be decided by a smart contract and the borrowing will be immediate, depending on the value of the NFT.
A smart contract is a contract stored on a blockchain that automatically executes when certain conditions are met. The contract code is executed on the blockchain. When a Pawn Bots holder requests to borrow against their NFT, the loan information will be automatically calculated, rather than having to go through a real person to decide how much value someone can get from their NFT.
“It’s instantaneous thanks to the smart contract. It just calculates how much it’s worth, and how much we’re lending right now, what’s the interest rate, what’s the terms? And you can have your money in seconds,” says Lopez.
“Pawn Bots are the least risky NFT,” he says. “We have a 24-hour buy-back guarantee if you don’t want it, and say you keep it after that. You will still be able to take advantage of a good percentage of its value which you can withdraw at any time. It’s not something you’re necessarily going to wait for a buyer on if you need immediate leverage. It is backed by HiFi, it will be backed by our protocol, our liquidity pool. For anyone who wants to get into NFTs, I think this is a great first NFT.
There is no fixed strike date for the Pawn Bots. Lopez says they’re trying to build an organic community in Discord and on Twitter, though there’s a fine line between building an organic community and keeping people’s attention with all the other NFT projects being launched every day.
The difference in community building is that HiFi wants to be “one of the first true DeFi NFTs”.
Pawn Bots calls what it offers “Utility 2.0”. There’s no plan for the benefits of traditional NFT utilities like merchandise, chat groups, and events. The focus is on advancing the future of the Web3 ecosystem through lending.
“I have a Chase Sapphire card, a Chase Freedom card. I don’t get a Chase t-shirt,” Lopez says. “The same applies to Coinbase, Gemini, where you can stake certain coins in your wallet. We don’t want to burn money doing any of these things. Right now it’s out, we want to be one of the first true DeFi NFTs. We just focus all of our profits and efforts on that specifically.
On April 27, HiFi announcement the launch of the HiFi Ecosystem, “a series of new projects and partnerships that build on and integrate into the HiFi Lending Protocol”, on its official Medium blog. The HiFi ecosystem includes a lending future with crypto, liquidity tokens, future assets, NFTs, and more. warranty.
“We borrow, lend, borrow, stake, grow yield,” Lopez says. “We’re opening the door for people to use their warranty, as leverage, to do any of these things.”