KuCoin has launched the first NFT ETF by a centralized exchange. The leading crypto-exchange platform debuted the NFT ETF Trading Zone, a product developed to improve the liquidity of NFT assets, on July 29.
But more importantly, KuCoin believes the product will lower the investment threshold for top-tier NFTs, thus expanding its target market to more than 20 million users.
— KUCOIN (@kucoincom) July 29, 2022
Prime NFTs are among the rarest NFTs in the top NFT collections. Yuga Labs’ Bored Ape Yacht Club and Cryptopunks projects contain the most premium NFTs, while Azuki, Meebits, Doodles and Clone X also have a rich portfolio of expensive characters.
Since NFTs are sold as 1-for-1 items, the number of NFT dealers capable of acquiring top-notch NFTs is limited. In addition, most of these NFTs are not offered as fractional NFTs, which allow users to purchase portions of a given NFT.
Broadly speaking, exchange-traded funds (ETFs) are trading instruments created based on a set of underlying assets. As a result, when an investor purchases an ETF, there is no ownership tied to the purchase, although the ETF’s trading data can be used by investors to make a decision on the liquidity of the underlying asset.
KuCoin leverages the same concept by allowing NFT traders to trade ETFs of major blue chip NFTs. The company has also been the first to introduce a USDT-dominated ETF product for specific top-tier NFTs.
The new Trading Zone aims to expand access by allowing users to own proportionally shared ownership of native top-tier NFTs, with the first token supported bing hiBAYC, an “ERC-20 token representing 1/1,000,000 ownership of the target BAYC in the Fracton Protocol’s Meta-Swap BAYC,” KuCoin said in a statement announcing the launch of the NFT ETF Trading Zone.
The company plans to launch more NFT ETFs in the future in partnership with Fracton Protocol’s corporate department.
KuCoin also indicated that hiPUNKS, hiSAND33, hiKODA and hiENS4 tokens will join hiBAYC as underlying assets at the beginning.
The NFT ETF Trading Zone marks a giant step in the leading cryptocurrency exchange platform’s efforts to establish a mature NFT market, lowering the threshold for high-potential, top-of-the-line NFT investment in the cryptocurrency industry.
“In addition, it also provides an exceptional trading experience with world-class liquidity, a better way to invest in superior NFTs through direct purchases with USDT, rather than ETH, and no concerns about managing NFT infrastructure elements, such as OpenSea, wallets and smart contracts,” the company wrote in the press release.
Commenting on the launch of his company’s new product, Johnny Lyu, KuCoin’s CEO, stated:
“As a trading platform that maintains its pace of penetration in the NFT sector, KuCoin will continue to offer user-friendly products for investors, allowing them to easily participate in NFT investments. We are excited to become the first centralized cryptocurrency exchange to support NFT ETFs that allow users to conveniently invest and trade the best NFTs directly with USDT. In the future, KuCoin will continue to explore more NFT-related products for our users.”
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