loan lettersOn Saturday, became the first ever domain name in the DNS system to be used as loan collateral with an Ethereum smart contract. The process, which was performed by yours truly, involved first tokenizing that domain name into an NFT on Namefi and then listing it as collateral offered for a loan on the NFT loan marketplace Teller. A loan was then executed which automatically transferred ownership of the domain name to an ethereum escrow address.

The significance of this transaction is that ownership of the domain name resides with whomever owns the NFT. If the borrower were to default on the loan, the smart contract would release the NFT to the lender, granting full ownership and control of the domain to the lender.

I did not alert either Namefi or Teller to the prospect of me conducting this live experiment before hand. Because one tokenizes domains into NFTs on mainnet and the other relies on mainnet NFTs to serve as collateral, the interoperability was automatic. The combined time to tokenize a domain and borrow against it (procedurally speaking) took less than 20 minutes.