NBA Top Shot Emerges as a Leading NFT Collection
Dapper Labs’ Michael Levy has amassed a remarkable fortune, turning an initial investment of $175,000 into $20 million within just six months through NBA Top Shot, a marketplace for non-fungible tokens (NFTs) where basketball enthusiasts can trade video highlights. As the venture evolved into a billion-dollar market, Levy and other early investors envisioned a decentralized lending platform, allowing users to obtain quick cash by leveraging their Top Shot “moments” as collateral. They named this platform Flowty, a nod to the Flow blockchain that hosts Top Shot.
The initiative garnered significant attention from Dapper Labs, the company behind NBA Top Shot and Flow, which participated in Flowty’s recent $4.5 million seed funding round, alongside other investors like Greenfield One and Lattice Capital. Dapper Labs’ Chief Business Officer, Mik Naayem, emphasized their belief that gaming serves as a gateway for individuals to embrace decentralization, and he views Flowty as a pivotal project to validate that perspective.
Flowty: A Unique Lending Model
Flowty operates similarly to a pawn shop but eliminates the need for a middleman, as explained by Levy, who is both co-founder and CEO of the platform. Borrowers can create listings detailing their loan terms, securing the loan with a single NFT. If a lender chooses to fund the loan, they can either receive their principal plus interest or obtain the borrower’s NFT, which is locked within the platform for the loan’s duration. Should the NFT be moved from the borrower’s wallet before the loan is funded, the listing becomes void. Flowty retains 10% of the interest generated from the loans, which can be denominated in FLOW, FUSD (a stablecoin pegged to the US dollar on the Flow blockchain), tUSDT (Flow’s version of Tether), and USD Coin.
Importantly, Flowty does not engage in any underwriting or customer assessments. “We do not provide underwriting services in any way, shape, or form. We don’t give guidance on specific loan listings. We never custody the collateral and we never custody the tokens,” Levy clarifies, adding that according to legal and regulatory standards, Flowty is merely a technology provider.
Risks and Precautions in NFT Lending
Despite its innovative approach, several risks accompany this lending model. The value of the NFT or the cryptocurrency used could significantly decline during the loan period. “In such a case, the borrower may default, leaving you with an NFT worth less than your loan amount—that’s the risk you take,” Levy warns. Additionally, borrowers could lose access to their accounts, or the platform itself might be susceptible to hacks, as evidenced by a recent phishing incident that resulted in the theft of numerous NFTs from OpenSea, the largest NFT marketplace.
The founders are transparent about these risks. “I wouldn’t recommend [Flowty] to someone who doesn’t understand NFTs or doesn’t grasp the nuances of NBA Top Shot,” Naayem notes. However, he believes that for those who have invested time in understanding the ecosystem, Flowty offers a valuable opportunity to engage with it.
Flowty’s Early Performance and Future Plans
Since its beta launch less than three months ago, Flowty has facilitated over 150 loans, with the average loan size ranging between $4,000 and $5,000. Although these figures may appear modest, the team is already contemplating the inclusion of other NFT collections (currently, only NBA Top Shot and Ballerz are supported) and expanding to additional blockchain networks. Despite the recent downturn in the NFT market—where the average sale price plummeted from over $6,800 at the beginning of the year to below $2,000—platforms like Flowty continue to attract investment. For instance, NFT lending protocol MetaLand recently secured $5 million in seed funding, led by the prominent crypto investment firm Pantera Capital.
