Pawn Bots is an NFT project by HiFi, a Utah company focused on a cryptocurrency lending protocol.
HiFi says that with Pawn Bots set to launch over the next few months with a range of 8,888 NFTs, owners will be able to borrow against their Pawn Bots immediately.
Pawn Bots wrote on their official blog on Medium that Pawn Bots is based on “four B’s: Build, Borrow, Buyback, Burn”.
If those last two Bs sound interesting, it’s because HiFi has promised to buy back all NFT from the collection at original price within 24 hours of reveal, and royalties from aftermarket sales are used to burn the bottom of the NFT Collection.
Burning an NFT effectively removes it from the collection. Any pawn bots used as collateral with owners unable to repay what they borrowed will also be burned, says Noel Lopez, marketing director for HiFi.
“This leads to a decreasing supply of NFTs for the people who own them,” says Lopez.
He adds that the company will likely borrow a percentage of NFT, not all of its value, as values can fluctuate. This percentage, as well as the price of Pawn Bots, has not yet been announced.
Initially, Pawn Bots will be the only NFTs lending through HiFi, but there is a future where HiFi will allow NFT owners of “blue chip” projects to borrow against their NFTs. Unlike lending from a bank, which must go through a credit check and be approved by the bank, NFT lending is decided by a smart contract and borrowing occurs instantly based on the value of the NFT.
A smart contract is a contract stored on a blockchain that is automatically executed when certain conditions are met. The code for the contract runs on the blockchain. When a Pawn Bots holder requests credit against their NFT, the credit information is calculated automatically, rather than having an actual person decide how much value a person can take from their NFT.
“Thanks to the smart contract, it is immediately available. It just calculates how much it’s worth and how much we’re lending at the moment, what’s the interest rate, what are the terms? And you can have your money in seconds,” says Lopez.
“Pawn Bots is the lowest risk NFT,” he says. “We have a 24 hour buyback guarantee if you don’t want it and suppose you keep it after that. You will still be able to use a good percentage of its value, which you can withdraw at any time. It’s not something you necessarily have to sit on and wait for a buyer to have when you need instant leverage. It’s powered by HiFi, it’s powered by our protocol, our liquidity pool. For anyone looking to get into NFTs I think this is a really good first NFT.”
There is no fixed minting date for Pawn Bots. Lopez says they’re trying to build an organic community on Discord and on Twitter, although there’s a fine line between building a community organically and maintaining people’s attention span since all the other NFT projects are launched every day.
The difference in community building is that HiFi aims to be “one of the first true DeFi NFTs.”
Pawn Bots calls its offer “Utility 2.0”. There are no plans for traditional NFT support services such as merchandise, chat groups, and events. The focus is on driving 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,” says Lopez. “The same goes for Coinbase, Gemini, where you can stake specific coins in your portfolio. We don’t want to burn money for it. For now it’s out of the gate, we aim to be one of the first true DeFi NFTs. We just focus all our profits and efforts specifically on that.”
On April 27, HiFi announced on its official Medium blog the launch of the HiFi ecosystem, “a series of new projects and partnerships that build on and integrate with HiFi’s rental protocol”. The HiFi ecosystem includes a future of lending with crypto, liquidity tokens, future assets, NFTs and more as collateral.
“We borrow, lend, leverage, sell and yield farm,” says Lopez. “We’re opening the door for people to leverage their collateral to do all these things.”
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