How to combine NFTs and DeFI?

NFTs are often associated with owning a rare and collectible digital asset, but as innovations emerge, we can find different uses for them. This time I will tell you how to use NFTs in Decentralized Finance (DeFi).

NFT enthusiasts and collectors are well aware of the financial benefits provided by industries such as Play-to-Earn, where non-fungible tokens are obtained for use in playable environments with the goal of achieving monetization while having fun and playing games. However, beyond the “play-to-win” concept, there are many more ways in which NFTs can be leveraged in the DeFi industry for short, medium and long term profit and interest. In NFTexpress we will look at a few different examples to understand how NFTs and DeFI can be combined.


These NFTs have as main characteristic to be able to get other assets, for example: A nested NFT can contain two types of tokens, the ERC-20 which are fungible and the ERC-721 which are non-fungible and form a basket of various assets and tokens within the blockchain. This way can allow the user to create greater flexibility in his portfolio and enable innovative financial uses. As a result, you will be able to create, manage and monetize a cryptocurrency portfolio with only the use of an NFT.


This project is based on the concept of nested NFTs and allows the creation of non-fungible tokens merged with novel features in the ecosystem. For example, if you are an artist, musician or simply a non-fungible token enthusiast, this platform offers the possibility for an NFT to contain other NFTs or digital assets based on the blockchain. An NFT can serve as a wallet that contains other assets just like a binder contains leaves inside. In addition, NFTs are time-locked and programmable in order to allow interest to be directed to other wallets and royalties to go directly to the creators. All this is through protocols that provide decentralized finance, to learn more I invite you to investigate the innovation of this protocol that can undoubtedly change the form of value you get for being a creator or owner of NFTs.


NESTED is another protocol that leverages nested NFTs. It is the first DeFi social trading platform based on non-fungible tokens.

The goal of the project is to allow owners to create an NFT wallet (yes, your wallet is an NFT) containing different assets to generate profits. Investors will be able to copy wallets and the wallet creators will be able to earn royalties every time their wallet is copied. This is why it is called social trading, since, by following the same investment performance as an expert, both parties generate economic benefits. Learn more about NESTED here.


This concept may be the most familiar to crypto users, as the market leaders are Aave y Compoundtwo of the best known projects in the DeFi industry. These platforms offer loans in exchange for depositing cryptocurrencies as collateral.

However, DeFi platforms and protocols are being developed that also accept NFT as collateral.


Stater is an example of how a platform can create a lending package from NFTs. This project is open source and uses NFTs for lending. Stater allows you to use a single NFT as collateral, but if you use multiple tokens that collateral can increase in value and the possibility of getting a loan in ETH.

Do you have a CryptoPunk, an Axie or NFT that is highly valued? You can become a lender and provide liquidity to the protocol to earn a portion of the interest rate.

There are other platforms that offer the same functionalities such as: NFTfi, which offers loans backed by NFTs and are distributed in assets such as wETH and DAI.

Also, there is Metastreetthe lending platform with NFTs where an $8 million loan was produced by lending 101 CryptoPunks NFTs.


We have made a note in NFTexpress on the Fractional NFTs where this new feature strengthens the decentralization of NFT markets thanks to the merger of non-fungible tokens and decentralized finance. This new way of obtaining NFTs undoubtedly improves the mechanics of buying and bidding non fungible tokens.

As I told you in the Fractional NFT note, the goal is that especially high-value NFTs, inaccessible to many users, have the opportunity to own a share of a non-fungible token of e.g. a Bored Ape.

Let’s review what this protocol is all about. The standard commonly used for NFTs is ERC-721, which one of its characteristics is that the non-fungible token is indivisible. Through Smarts Contracts (smart contracts), it is possible to generate multiple ERC-20 tokens to link them to an ERC-721 that represents the entire NFT. Consequently, each holder of an ERC-20 will hold a part of the ERC-721.


Fractionalcurrently rebranded as TESSERAis one of the most popular platforms, where NFT owners can mint NFT vaults and in return receive ERC-20 tokens that will represent 100 percent ownership of the NFT.

One of the positive things is that owners can leverage these ERC-20 tokens in DeFi applications to earn rewards without selling their NFT. Also, they can put ERC-721 fractions, already converted to ERC-20, up for sale and give interested buyers the opportunity to place bids at or above the reserve price to acquire more than one fraction (or the entire NFT).

This is a representative way of what a Fractional NFT would look like. Fractional’s vaults already contain NFTs from world-renowned collections such as: Cool Cats, CryptoPunks y Bored Ape Yacht Club.


In the ecosystem of decentralized finance, services and products are being developed day by day with innovations and advances in terms of adoption and usability. For its part, NFTs can be a technology that will clearly benefit from DeFi and combining them will give the possibility of creating improved versions with the objective of non-fungible tokens being used as financial instruments beyond being collections, profile images, or digital properties that generate benefits and exclusivities in the real and virtual world.

Written by Rodrigo Catalan (TW: @RodrigoCatalanB) for NFT Express.