## Introduction 
We are thrilled to announce that Upshot will be the inaugural partner/ strategist for [Astaria](https://astaria.xyz/), a new on-chain NFT lending platform. Astaria’s protocol introduces an innovative three-actor-model where strategists, such as Upshot, can outline the terms of NFT loans through dedicated vaults. These vaults accept capital from liquidity providers, which is subsequently lent out to NFT borrowers, enhancing the transparency and efficacy of the NFT lending process. 

By bringing [Upshot’s industry-leading machine learning models](https://upshot.xyz/post/how-upshots-ml-models-work) to Astaria's lending platform, we unlock an innovative frontier in NFT financial markets, ensuring seamless and accessible lending practices. With a proven track record of appraising over 104 million NFTs from a diverse range of over 87,000 collections, our robust quantitative analyses offer unprecedented breadth and accuracy. As Astaria strategists, we employ our sophisticated recovery rate models and risk management framework, not only to gauge the probability of loan default but also to maintain a diversified loan portfolio, protecting both liquidity providers and ourselves from potential market volatility. This collaboration embodies our shared vision of propelling a new era of NFT financialization, where seemingly “illiquid” assets can be leveraged for a new wave of DeFi opportunities. 

## A Very Brief History of NFT Lending Today
Historically, the NFT lending market has primarily operated on a peer-to-peer basis, similar to archaic barter systems. In this model, borrowers and lenders agree on terms and a smart contract handles the transactions trustlessly. This process allows for great flexibility, matching terms on a case-by-case basis. However, the peer-to-peer model inherently requires both parties to reach an agreement on terms, a process often encumbered by a divergence in perceived values and risk factors. Borrowers, often emotionally attached to their NFTs, may overvalue them, while lenders, cautious about the borrower's credibility or the volatility of the collection, might assign a higher risk premium. This mismatch in sentiment often leads to less efficient market-clearing outcomes.

In response to these challenges, the peer-to-pool model has emerged as an alternative option to allow for a smoother user experience by removing the need for individual agreements. Lenders contribute to a pool which manages liquidity, allowing borrowers to access instant liquidity. Despite pooling risks for all liquidity providers, this model offers a more scalable path that closely mirrors the fungible market where LPs can deposit capital and earn. Peer-to-pool models depend heavily on accurate valuation methodologies to set loan terms. Over-reliance on oracle-based price calculation methods (such as floor price) can leave the system vulnerable to manipulation as well as limited in usefulness. 

The alternative to avoid oracle-based manipulation is to use specialized appraisers employing nuanced, machine-learning-based algorithms to estimate NFT value, incorporating factors such as traits, previous owner history, and other relevant data points. This takes us to Astaria's unique approach - the three-actor model.

## Introducing Astaria’s Three-Actor Model
[Astaria](https://astaria.xyz/) is an on-chain NFT lending platform designed with the native DeFi user in mind. The protocol provides a system for strategists, like Upshot, to publish loan NFT terms through vaults, which accepts capital from liquidity providers and extends it to borrowers. For example, one strategist may allow a 10 ETH loan with a 10% interest rate to be taken out against a specific NFT for one month. These terms can be continuously updated as markets fluctuate, and borrowers can refinance to take advantage of more favorable terms.

This unique, three-actor model fosters competitive yields for liquidity providers and instantaneous liquidity for borrowers, all while mitigating the need for traditional, time-consuming bid-and-ask negotiation processes. With a dynamic ecosystem of strategists, borrowers, and liquidity providers, Astaria ensures market competitive rates and flexibility for loan refinancing, without the fear of forced liquidations on price changes.

![Astaria-3-Actor-Model](//images.ctfassets.net/lhkcghnr8ql4/37dWByvTEQMljUMghW73ej/3cf966af4c8ee0d56bbbd10559818102/3AM-ccb5b9d756e22d102d2c5eeba160f03a.png)

Strategists, including Upshot, within Astaria's framework have the responsibility of deploying vaults complete with loan terms matched to supported NFTs. These terms can be dynamically adjusted as market conditions change, creating a lending ecosystem that's highly responsive to real-time fluctuations. All of this contributes to a healthy, competitive balance that ensures fair and accurate terms, striking a balance between attracting borrowers and securing sufficient capital.

### Core Benefits of Astaria 
Astaria has three core benefits for users: 1) instant liquidity, 2) competitive yields and loan terms, and 3) no forced liquidations. Here's a closer look at these benefits:

- __Instant liquidity__: This feature eliminates time-consuming bid-and-ask negotiations, allowing users immediate access to a variety of loan terms offered by expert strategists.
- __Competitive yields and loan terms__: Astaria fosters a competitive environment where strategists compete for capital, ensuring beneficial market rates for both liquidity providers and borrowers.
- __No forced liquidations__: Borrowers are only subject to liquidation if their loan expires with outstanding debt. This eliminates forced liquidations due to market price fluctuations, offering additional security for borrowers amidst market volatility.

#### Benefits for Borrowers 
For borrowers, the Astaria vault system presents a unique combination of flexibility, immediacy, and value. By holding their NFTs as collateral, borrowers gain immediate access to liquidity in an instant and permissionless protocol. This design enables NFT holders to unlock the financial potential of their assets immediately, without the hurdles often associated with traditional peer-to-peer systems. Even as the NFT is locked as collateral, borrowers can still tap into its utility. 

Astaria's FlashActions feature allows temporary unlocking of the NFT to perform predefined actions, such as collecting Uniswap fees or claiming airdrops, all while ensuring the NFT is returned within the same block. Additionally, Astaria enables borrowers to take multiple loans against the same NFT, up to five times, provided the maximum potential debt does not exceed the strategist-set limit. This multifaceted borrowing process, complete with the possibility of refinancing, offers borrowers an unprecedented level of freedom and control over their digital assets.

#### Benefits for Liquidity Providers 
On the other side of the coin, liquidity providers reap significant benefits from participating in Upshot’s vault on Astaria. When they contribute capital to PublicVaults, they receive yield-bearing ERC-4626 VaultTokens, thereby earning interest on their provided funds. This model presents an attractive proposition for liquidity providers, enabling them to earn from their capital while contributing to a DeFi ecosystem. The epoch-based operational system of PublicVaults also provides liquidity providers with a sense of stability, as withdrawals need to be signaled at least one epoch in advance.

### Loan Mechanics on Astaria 
Loan mechanics on the Astaria platform are shaped by the fine-tuned parameters defined by strategists, offering flexibility and precision in the lending process. Here's a quick overview of these parameters:

- __Loan Amount__: The loan amount, denominated in the ERC20 token used by the Vault.
- __Duration__: The loan duration in seconds.
- __Interest Rate__: The interest rate of the loan. All rates on the Astaria protocol are in simple interest and non-compounding.
- __Maximum Potential Debt__: This is the highest possible debt that can be accrued against an NFT considering all existing loans. It's a vital factor when strategizing multiple loans against the same collateral.
- __Liquidation Initial Ask__: The requested starting price of the Dutch auction if the collateral is sent to liquidation. Note that the initial auction price is set by the most senior lien in the lien stack.

These mechanics contribute to the versatility of Astaria's lending platform, allowing users to have diverse and strategic engagement with NFTs. For more in-depth information about these mechanics and how they function within the larger Astaria ecosystem, we encourage you to visit Astaria's loan term [documentation](https://docs.astaria.xyz/docs/protocol-mechanics/loanterms). 

## Upshot’s Vault Management Strategy 
At Upshot, our lending strategy is designed to minimize risk for the lender while maximizing value for the borrower. To accomplish this, we leverage Upshot's industry-leading appraisals, recovery rate models, default probability estimates, and our proprietary risk management framework. This ensemble of models and analyses ensures that our lending strategies provide fair, accurate terms, and a healthy yield, all while mitigating the risk exposure for our liquidity providers and ourselves.

From selecting high-quality NFT collections to considering future collateral value when determining loan amounts, each element of our strategy is tailored to provide optimal benefits for all stakeholders. Borrowers can take advantage of our flexible lending process where our quant team fetches all the loan terms, which are then fed into the Astaria SDK. This system allows us to offer borrowers the most current and relevant lending terms, frequently updated every 30 minutes, and lenders the opportunity to stake in our vault. 

We have also added a "kill-switch" feature that quickly responds to significant market events, further ensuring the protection of our liquidity providers. As we embark on this journey with Astaria, we remain committed to continuously improving and refining our lending strategies, based on market trends and user feedback

### Upshot’s Vault 
Upshot's initial offering will feature one unified vault, presenting several advantages:

- __Simplicity__: A single NFT lending vault simplifies management and operations, making it easier for users to understand the lending process.
- __Greater liquidity__: Consolidating NFTs from various owners increases overall market liquidity, facilitating borrower access and enabling lenders to earn interest.
- __Reduced risk__: Pooling NFTs from multiple owners spreads default risk across a broader pool of borrowers, reducing loss risk for individual lenders in case of a default.

This setup will be reviewed and potentially revised based on user feedback and demand, with plans to launch additional vaults over time to cater to varied risk profiles and lending strategies.

### Supported Collections (As of May 25, 2023) 
As of the initial launch, Upshot will support the following collections as part of our initial vault: 

- Azuki
- BAYC
- Beanz Official
- Chromie Squiggles
- CloneX
- CryptoDickbutts
- Doodles
- MAYC
- Milady
- Moonbirds
- Pudgy Penguins

We look forward to expanding our collection and vault offerings in the coming months.

### Upshot’s Methodology 
Upshot’s strategy embraces "conservative NFT lending," with terms designed to minimize lender risk while still providing value to the borrower. Core elements of our strategy include:

- __Collateral__: Borrowers provide an NFT as collateral for the loan, selected from high-quality collections with a history of stable or appreciating value.
- __Loan amount__: The amount is a function of the future collateral value, less a margin for forecasting uncertainty, offering adequate protection to the lender in case of default.
- __Loan duration__: The duration is based on the highest future recovery value over a 30-day time horizon, ensuring maximum recovery value in the event of a default.
- __Interest rate__: The rate compensates the lender for the risk involved in lending the NFTs, such as default risk and illiquidity risk.
- __Leverage__: Our initial strategy does not permit second or third lien loans.

Please note that this design is flexible, and adjustments will be made based on feedback regarding parameters such as loan amount and interest rate. 

### Our Risk Mitigation Framework
In our commitment to maximize value and mitigate risk for Astaria Vault participants, Upshot utilizes a sophisticated Portfolio Optimization framework, deeply rooted in Modern Portfolio Theory (MPT). MPT emphasizes the power of diversification, aiming to create an optimal asset allocation with superior risk-adjusted returns through careful optimization strategies.

Upshot's approach to portfolio optimization is methodical and data-driven. We begin with a collection's time-series data, utilizing daily floor prices and our in-house generated appraisals to construct robust time series. From these data points, we calculate risk and return approximations, employing different modeling methods such as mean, exponentially weighted average, or machine learning-based algorithms like Auto-regressors and GARCH.

After determining return and risk approximations, we move to portfolio selection. We employ optimization solvers to determine collection weights, thereby constructing a portfolio that meets investors' objectives within set constraints. Upon establishing collection weights, we then proceed with our capital allocation strategy.

Recognizing the limitations of traditional MPT techniques, particularly in the dynamic and sometimes unpredictable NFT market, we've integrated alternative portfolio construction methods. These include minimum spanning tree (MST) and centrality-based methods from Graph Theory, which offer a more nuanced approach to diversification and have shown promising results in terms of out-of-sample performance. This innovative strategy not only ensures that our portfolio is robust against market fluctuations, but it is also highly scalable.

## Conclusion 
This partnership between Upshot and Astaria presents a promising new horizon NFT financialization. To learn more about Upshot and our strategic approach, visit our [website](https://upshot.xyz/). For a closer look at how we're utilizing our robust machine learning capabilities with Astaria's on-chain NFT lending platform, check out our [Astaria-Upshot vault](https://astaria.xyz/lend/vaults/0xe5149d099b992e3dc897f3f4c88824eac2a6a59d). If you're interested in diving deeper into Astaria's protocol or need help navigating the platform, you can find comprehensive guides and helpful details in Astaria's [documentation](https://docs.astaria.xyz/). 

We invite you to embark on this journey with us as we redefine the boundaries of ownership in the world of NFTs. This partnership with Astaria allows individuals to navigate an expansive range of unique use cases for their jpegs, unlocking unprecedented ways of engaging with NFTs. Together, we are transforming the concept of asset ownership, breaking down barriers and bridging the gap between the world of DeFi and NFTs. Join us in this exciting new chapter as we unlock the potential of NFTs like never before by visiting our [vault](https://astaria.xyz/lend/vaults/0xe5149d099b992e3dc897f3f4c88824eac2a6a59d).

Astaria has partnered with Upshot bringing Upshot lending strategies to their platform.

Upshot Unveils Strategic Partnership with Astaria as Inaugural Vault Strategist

## Introduction
The world of investing has been transformed by the rise of digital assets, and none more so than NFTs. These unique digital assets have captured the imagination of investors around the world, and there is now a growing demand for indexes that can track their performance.

[__Upshot Indexes__](https://app.upshot.xyz/indexes) offer a new approach, providing index methodologies and API endpoints for developers to create index products that track the performance of a basket of NFTs. This allows projects to offer exposure to a broad range of NFTs or specific segments of the market. For example, developers might use Upshot to build an NFT index that tracks the performance of blue-chip NFTs or Yuga Labs NFTs.

## The Basics of NFT Indexes and ETFs
NFT indexes allow investors to track and gain diversified exposure to the world of non-fungible tokens without the need to purchase individual NFTs. These indexes function similarly to traditional indexes by tracking a basket of assets – in this case, NFTs – that meet specific criteria such as rarity, popularity, or historical value. Key benefits of NFT index funds include ease of entry, diversification, reduced time and knowledge requirements, and improved liquidity.

To learn more about the intricacies of NFT index funds and how they compare to traditional index funds, read our in-depth blog post [__here__](https://upshot.xyz/post/introduction-to-nft-index-funds).

### Challenges of Building NFT Indexes
Creating NFT indices presents a unique set of challenges such as limited scope when tracking floor NFTs, pricing complexities, and liquidity and capacity concerns. To learn more about these challenges, please refer to our [__previous blog post__](https://upshot.xyz/post/introduction-to-nft-index-funds) on NFT indexes more generally.

#### Limited Scope When Tracking Floor NFTs
Presently, NFT index funds predominantly focus on tracking the floor prices of NFT collections. However, this approach fails to capture a complete picture of the range of outputs that are in a collection, as some collections contain highly-valuable rare NFTs that are worth significantly more than floor NFTs. Consequently, this limited scope results in an inaccurate representation of the true diversity and value potential of a collection.

#### Pricing Complexities
NFT indices typically weight-adjust their construction based on the floor price the various collections within the index. This does not take into account the collection as a whole, which would require pricing algorithms to better understand the value of the entire collection. Developing sophisticated pricing models for NFTs can be challenging due to the unique characteristics of each asset and the lack of historical data compared to traditional financial assets.

#### Liquidity and Capacity Concerns
NFTs are non-fungible, low-velocity assets. This characteristic poses challenges for NFT indexes in that oftentimes there is not sufficient capacity in the open market to rebalance the portfolio. Moreover, the acquisition and disposal of NFTs can be time-consuming and expensive, potentially hampering the fund's ability to manage its portfolio efficiently and effectively.

## Introducing the Upshot Indexes: Empowering Projects to Create More Expressive NFT Financial Infrastructure
Upshot has constructed a set of NFT index methodologies to enable other projects to build more expressive financial primitives for NFTs with our API. By providing the framework and tools necessary for designing and maintaining NFT indexes, Upshot aims to enhance the accessibility of the NFT space and open up opportunities for more meaningful capital allocations as well as more interesting financial innovations.

Leveraging our quant team’s extensive research and experience in constructing indexes for less liquid financial assets, Upshot's initial set of indexes track core sectors of the NFT space. This initial set of indexes include the Upshot Yuga Index, Upshot Art Blocks Curated Index, and Upshot PFP Index. These methodologies can be used to track the performance of specific segments of the NFT market or the broader market as a whole, with updates available on an hourly cadence.

By equipping index creators with robust and accurate pricing methodologies, Upshot empowers them to overcome common challenges like liquidity constraints, capacity issues, and the accurate valuation of assets within a collection. Through this approach, Upshot facilitates the growth of the NFT index ecosystem, making it more diverse and catering to a wide range of investor preferences and risk appetites.

### Presenting Upshot's Premier NFT Index Methodologies
Upshot is launching three initial index methodologies that cater to various NFT market segments: the Upshot Yuga Index, Upshot Art Blocks Curated Index, and Upshot PFP Index. 

#### Upshot Yuga Index
The methodology behind the Upshot Yuga Index monitors the performance of collections under the Yuga Labs umbrella, weighted by appraisal-based market cap. This methodology captures some of the most liquid NFT collections, enabling developers to offer exposure to verticals such as PFPs, metaverse, generative art, and gaming in a single index. The Upshot Yuga Index includes collections such as Bored Ape Yacht Club, Otherdeed for Otherside, Mutant Ape Yacht Club, CryptoPunks, Meebits and Bored Ape Kennel Club. 

To view more details around the methodology of the Upshot Yuga Index, visit [__here__](https://app.upshot.xyz/indexes/yuga). 

#### Upshot Art Blocks Curated Index 
The methodology behind the Upshot Art Blocks Curated Index tracks the top 20 Art Blocks Curated NFT collections, enabling developers and projects the ability to offer exposure to cutting-edge generative art. This index construction is composed of the following collections: Chromie Squiggle by Snowfro, Fidenza by Tyler Hobbs, Ringers by Dmitri Cherniak, Gazers by Matt Kane, and Archetype by Kjetil Golid among others. 

For more information on the methodology of the Upshot Art Blocks Curated Index, click [__here__](https://app.upshot.xyz/indexes/artblocks-curated).

#### Upshot PFP Index
The methodology behind the Upshot PFP Index tracks the top 20 PFP (profile picture) collections, weighted by appraisal-based market cap. This index represents a significant portion of the NFT space, with many PFP projects driving social identity, community engagement, and network value within the digital realm. The Upshot PFP Index includes collections such as CryptoPunks, Bored Ape Yacht Club, Azuki, Clone X, Pudgy Penguins, and Doodles. 

For more information on the construction of the Upshot PFP Index, click [__here__](https://app.upshot.xyz/indexes/pfp).

## Ways to Use Upshot’s NFT Index Methodologies  
#### Utilizing Upshot's NFT Index API as a Price Oracle for Perpetuals
Upshot's NFT Index API endpoint can be utilized as a powerful price oracle for the creation of NFT perpetuals. Perpetuals are a type of financial derivative that allows traders to take long or short positions on an underlying asset without an expiry date. In the context of NFTs, perpetuals can enable traders to speculate on the future price movements of NFT collections or the overall NFT market without actually owning the underlying NFTs.

The Upshot NFT Index API endpoint provides access to novel index constructions and price feeds that are crucial for calculating the index value and ensuring that the perpetual futures accurately track the performance of the underlying NFT collections. This includes information such as weighting based on appraisal-determined market caps of various NFT collections included in the index. Additionally, the API endpoint allows users to retrieve historical index prices, which can be used to analyze price trends, develop trading strategies, and assess the risk and return characteristics of the NFT market.

By leveraging the Upshot NFT Index API endpoint as a price oracle, creators of NFT perpetual futures can benefit from a robust, reliable, and up-to-date source of pricing information. This not only ensures that the perpetual futures are accurately tracking the performance of the NFT market, but also helps to establish trust and credibility among traders and investors participating in the NFT perpetuals market. 

#### Unlocking Holistic NFT Market Insights for Analysts and Researchers 
Upshot's NFT Index API is a powerful tool that enables analysts, researchers, and media organizations to gain a comprehensive understanding of the NFT market. NFT indexes offer a novel method for analysts to understand the NFT market, as they provide a holistic perspective on the rapidly evolving landscape, moving beyond the limitations of individual collections and enabling a more comprehensive analysis.

By breaking down the NFT market into different segments, such as art, gaming, and PFPs, analysts can identify trends and patterns within each category. Tracking the performance of NFT indexes over time enables the identification of market movements, emerging trends, and potential investment opportunities. Utilizing Upshot’s NFT API, analysts can generate valuable insights by creating in-depth reports, research papers, or news articles, which in turn assist investors, enthusiasts, and the general public in making informed decisions and staying up-to-date on the latest developments in the NFT market.

## Conclusion
The launch of Upshot Indexes marks an exciting new chapter in the rapidly evolving intersection of DeFi and NFTs. As the NFT market continues to mature, we can expect to see more projects leveraging these NFT indexes as a way to offer exposure to this exciting new asset class. By providing developers with robust methodologies and an easy-to-use API endpoint to build with these NFT indexes, Upshot is paving the way for a future where the financialization of NFTs unlocks new investment opportunities and enhances our understanding of this dynamic market. 

To learn more about the technical details of Upshot's offering, we invite you to explore our [__developer API documentation__](https://docs.upshot.xyz/reference). If you're ready to start building your own NFT index products, you can sign up for access to [__our developer portal__](https://developer.upshot.xyz/signin). As NFTs continue to reshape the digital asset landscape, we believe that innovative financial infrastructure, like Upshot Indexes, will play a vital role in driving the development of novel financial primitives. 

Introduction article to Upshot Indexes: A New Era of NFT Exposure.

Introducing Upshot Indexes: A New Era of NFT Exposure

Index funds are an indirect way to get exposure to an entire market without having to put in the work to pick the underlying assets individually. Today, various types of index funds exist, including equity indexes, bond indexes, and commodity indexes, catering to diverse investment needs and preferences. 

In the age of digital assets, an NFT index fund is a vehicle that tracks a index of NFTs, typically from similar collections (e.g. Yuga Labs), traits (e.g. hoodie CryptoPunks), or prestige (e.g. Art Blocks Curated). This post will explore how NFT indexes work, what they enable, challenges uniquely faced by NFT indexes, and how those challenges may be overcome. However, before we jump into NFT index funds, it is helpful to understand a brief history of index funds in the traditional finance markets. 

## What is a traditional index fund?

An index fund is a type of mutual fund or exchange-traded fund (ETF) where a portfolio is constructed to match or track the components of a financial market index. Generally, traditional index funds offer broad market exposure, low operating expenses, and low portfolio turnover. 

Warren Buffett famously recommends index funds as a way to build wealth. Rather than training people to pick out individual stocks for investment, Buffett says that it makes more sense for the average investor to buy an index of the S&P 500. 

## How traditional index funds work

Index funds are typically considered a more passive type of fund management. As opposed to hedge fund managers who actively try to stock pick and time the market with buys and sells, index fund managers build up a portfolio of holdings to mirror the securities of a particular index. The idea is that the investment profile of the index matches the performance of a whole, broad segment of the market. 

For example, index fund investors can buy funds that focus on companies with small, medium or large capital values, or they can buy funds that focus on sectors such as technology or energy. While these more specific index funds may be less diversified than the broadest market index, they are still more diversified than if someone were to buy individual stocks within a sector. 

## Key Examples of Index Funds in TradFi

### S&P 500

In the United States, the S&P 500 Index is one of the most popular indices. The S&P 500 Index, or Standard & Poor's 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an exact list of the top 500 U.S. companies by market cap because there are other criteria that the index includes such as liquidity, financial stability, and a history of profitability. As a result, the S&P 500 Index offers a comprehensive representation of the U.S. stock market's health. The S&P 500 index is regarded as one of the best gauges of prominent American equities' performance.

### Dow Jones Industrial Average (DJIA)

Also known as the Dow 30, the Dow Jones Industrial Average (DJIA) is a stock market index that tracks 30 large, publicly-owned blue-chip companies trading on the New York Stock Exchange (NYSE) and Nasdaq. The Dow includes companies like Nike, Salesforce, Goldman Sachs, Visa, Coca-Cola and IBM. 

The DJIA is also designed to serve as a proxy for the health of the broader U.S. economy. Often referred to simply as the Dow, the DJIA is one of the most-watched stock market indexes in the world. Although the Dow encompasses a variety of businesses, each can be characterized as a blue-chip company that consistently generates stable earnings.

## What is an NFT Index Fund?

NFTs represent a new frontier of digital assets, art and internet culture. Composed of unique digital items that cannot be replicated or replaced, NFT index funds provide a novel way for investors to gain diversified exposure to the new asset class of non-fungible tokens without having to research and pick the individual NFTs themselves. 

An NFT index fund works similar to traditional index funds in that it tracks a basket of assets–in this case NFTs. To do this, the index fund manager will select NFT collections that qualify for the index based on specific criteria, such as rarity, popularity, or historical value. For example, the NFT index fund manager may track a basket of Yuga Labs NFTs, which include Bored Ape Yacht Club, Mutant Ape Yacht Club, Bored Ape Kennel Club, and Otherside NFTs. They will also consistently monitor the collections for various risks, as set forth by the index guidelines.

The index fund manager will also determine how often each index is rebalanced, generally monthly, quarterly, or bi-annually. This rebalancing process involves adjusting the weight of each collection within the index, typically based on factors like their floor price, appraised value, or overall market capitalization.

## Benefits of NFT Index Funds

### Ease 
With the rapid growth of the NFT market, NFT index funds offer a familiar and easy way for investors to gain exposure to the burgeoning market of digital assets in a manner that is very similar to how TradFi investors already operate. By leveraging the expertise of index fund managers, potential investors can enter the complex world of NFTs with greater confidence and reduced barriers to entry. 

### Diversification
The average investor does not have the capital to buy a breadth of NFTs to represent all of the various blue-chip NFT collections out there. With floor prices of blue-chip NFTs rapidly climbing, even one NFT purchase can eat up the majority of dry powder for an individual investor. NFT indices are a great way to gain broad exposure with a smaller amount of capital. Investors can enjoy the benefits of owning a diverse portfolio of NFTs, reducing the risk associated with concentrating investments in just a few assets. 

### Lower Time and Knowledge Requirements 
The NFT market moves lighting fast—collections can take off or dump within a weekend of news. It is exhausting for the average NFT participant to keep up with the major sources of news, especially when much of the information lives on Twitter or private Discord servers. Similar to how average TradFi investors are not listening to every public company earnings call, NFT indices allow people to participate in a broad manner without having to understand every detail. This not only saves time and energy, but also helps mitigate the risk of making financial decisions based on incomplete or inaccurate information.

### Liquidity 
One of the challenges NFT investors face is the lack of liquidity in the market, as buying and selling individual NFTs can sometimes be difficult due to their unique nature and varying demand. NFT index funds can help address this issue by providing investors with an investment vehicle that is easier to trade in and out of compared to individual NFTs. The pooled nature of index funds typically allows for greater liquidity, making it more convenient for investors to adjust their positions as needed.

## Complexities with Building NFT Indexes 

### Some Only Track Floor NFTs
Today, the NFT index funds that do exist typically only track floor price. Floor NFTs are not indicative of the entire collection, especially when some collections have grails (or rare NFTs) that are worth several orders of magnitude more than the floor NFT. The limited scope of floor NFTs does not accurately reflect the true diversity and potential value within a collection, which can lead to suboptimal investment performance. 

### Pricing 
NFT indices typically weight-adjust their portfolios based on the floor price of a collection. This does not take into account the collection as a whole, which would require pricing algorithms to better understand the value of the entire collection. Developing sophisticated pricing models for NFTs can be challenging due to the unique characteristics of each asset and the lack of historical data compared to traditional financial assets.

### Liquidity and Capacity Issues 
NFTs are non-fungible assets that often have low-velocity. Given that each asset is unique, they change hands much less frequently than traditional ERC-20 tokens or stocks. It is difficult for an NFT fund to curate an index and have the right capacity on the open market to rebalance it as needed. Additionally, the process of acquiring and disposing of NFTs can be time-consuming and costly, which may limit the fund's ability to efficiently and effectively manage its portfolio.

## Possible Solutions to Building NFT Indices 

### NFT Appraisals 

NFT appraisals allow NFT indices to place a better basket of assets that more accurately reflect the broader collection, beyond simply adding floor assets. They can better index the higher end of the NFT market by taking into account rarity, metatraits, and historical trading patterns, among other factors. Developing comprehensive appraisal methodologies and leveraging advanced ML models can help index fund managers more accurately assess the value of each NFT within a collection, leading to a more representative index.

### Capacity
NFT index funds may face capacity constraints due to the illiquid nature of the assets they hold. To address capacity issues, NFT index funds can implement strategies such as limiting the size of the fund, focusing on more liquid NFT collections, or utilizing derivatives and other financial instruments to gain exposure to the underlying assets without directly owning them. This approach can help improve the efficiency and flexibility of portfolio management while minimizing the impact of liquidity constraints. 

In traditional finance, the high-yield bond market, also known as the "junk bond" market, faces similar capacity constraints due to the illiquidity of these assets. To manage these constraints, some high-yield bond index funds employ strategies like sampling, wherein the fund invests in a representative sample of the bonds in the index, rather than holding each bond in the index. This sampling approach allows the fund to maintain a more manageable portfolio while still aiming to achieve a similar risk and return profile as the overall index. By adopting similar strategies, NFT index funds can address capacity constraints and provide investors with diversified exposure to the NFT market, even in the face of illiquidity challenges.

### Synthetics & Perpetuals
A synthetic asset is an asset that tracks the value of another asset, essentially mirroring its price movements without the need for direct ownership of the underlying asset. One common form of synthetic asset is a perpetual contract, or perp, which is a type of derivative that does not have an expiration date. In order to create a synthetic asset, a pool of capital and a reliable price feed that consistently updates are required. A well-known example of a synthetic asset is DAI, which tracks the value of the US Dollar. Utilizing price feeds for an NFT index can provide investors with synthetic exposure to the index through instruments like perpetual contracts. This approach may help mitigate some of the capacity issues and potentially simplify the design of an investable NFT index product, making it more accessible for a wider range of investors.

## The Future of NFT Index Funds with Upshot
For several decades, traditional financial markets have offered investors the opportunity to get broad exposure to various asset classes by simply buying into a basket of goods that serve as a proxy for the market. As NFTs emerge as a novel class of digital assets, investors are increasingly eager to have vehicles that give exposure to the asset class without having to put in the time and effort to pick various jpegs individually. 

As the NFT market continues to mature, innovative solutions to these problems will play a crucial role in addressing the complexities and challenges associated with building and managing NFT indices. By providing robust and accurate pricing methodologies, Upshot can empower index issuers to easily overcome obstacles such as liquidity constraints, capacity issues, and accurate valuation of assets within a collection. As a result, the development and adoption of NFT index funds will become more seamless and efficient, ultimately making the world of NFT investing more accessible and attractive to a broader range of investors. Ultimately, NFT indices will be an increasingly important frontier in allowing individuals to interact with the new digital renaissance. 


Introduction To NFT Index Funds

Two years ago, NFTs represented a small industry with 100s, *maybe* 1000s, of early collectors. In the years that followed, we saw the meteoric rise of a new asset class that brought value and speculation to things like pfps, memes, generative art, and the “metaverse”. NFTs were arguably one of the first crypto applications to break into mainstream consumer markets in a meaningful way. While some fortunes were made during this time, the past 8 months of the NFT market haven’t been as cheerful. 

Both NFTs and fungible tokens have dropped in value a fair amount over this past year. However, in contrast to the significant price decline seen in the broader crypto market of fungible tokens, the more significant “drop in NFTs” is their drop in trading volume, which has generally outpaced their drop in price. A dip in bid volume (demand) of illiquid assets, by definition, implies a dip in transaction volume (not necessarily a dip in price, as that would suggest the assets are more liquid).

![nft market volume](//images.ctfassets.net/lhkcghnr8ql4/2To3r2ESetKHXqegEkXJEE/d910f3882271f7c4f98bcfb4dcde36e8/Screen_Shot_2023-01-18_at_11.13.29_AM.png)
Source: [https://dune.com/hildobby/NFTs](https://dune.com/hildobby/NFTs "hildobby dune dashboard")

However, though many people have stopped *buying* NFTs during this “NFT winter”, that doesn’t mean people have stopped *building* important NFT infrastructure. In fact, there is an exciting wave of new products and primitives being built in a burgeoning category: the intersection of DeFi and NFTs (DeFi x NFT).

![nftfi ecosystem](//images.ctfassets.net/lhkcghnr8ql4/4I0G0sLfrANc8txmOgM8p0/73b5197019919a5a5cfe99a52b95881f/nftfi_ecosystem.jpeg)
Source: [https://twitter.com/0xminion/status/1562495502377431040/photo/1](https://twitter.com/0xminion/status/1562495502377431040/photo/1 "NFTFi Ecosystem")

Within the DeFi x NFT category, we find a vast set of new ways to extract value from our NFTs, including NFT lending protocols, NFT perpetuals, NFT synthetics, AMMs, and more. Among this rich set of possibilities, NFT lending and NFT perpetuals have started to gain considerable adoption to date. In NFT lending, there are multiple protocols realizing notable usage with a new cohort of protocols on the horizon. NFT perpetuals, although newer and with fewer entrants, have also seen explosive growth as of late (driven by usage of [nftperp](https://nftperp.xyz)).

Standout usage of these new financial instruments is no surprise. Both NFT lending and perpetuals are powerful because of their flexibility: they're useful in good times ***and*** bad times. In good times, they can be used to lever up on your NFT positions (e.g. taking out a loan of ETH against your Bored Apes to buy more Bored Apes or opening a levered perpetual position tracking the ape price movements). In bad times, they can be a way for holders to hedge against their downside (loans resemble put options for NFTs and perpetuals are bi-directional by design).

Thus, in today’s overall bear market, the growth of NFT lending and NFT perpetuals come at an opportune time. The opportunities afforded by these new protocols has not been lost on NFT collectors, desperate as ever to put their holdings to work. It comes as no surprise that the recent uptick in NFT prices coincides with NFT leverage and debt approaching all-time highs, and climbing.

![nftperp open interest](//images.ctfassets.net/lhkcghnr8ql4/5WZ2tf9qcY0rGiGlvaLcnD/6bc301766c60e694b9b807506ec58da9/nftperp_open_interest.jpeg)
Source: [https://twitter.com/MessariCrypto/status/1614563064602570752/photo/1](https://twitter.com/MessariCrypto/status/1614563064602570752/photo/1 "nftperp open interest")

What must not be lost on collectors, however, is the effect leverage has on markets: one of amplified volatility. This means that, following an NFT rally uniquely characterized by record NFT debt and leverage, when prices fall, *they’ll fall fast*. The booms and busts of the maturing NFT markets we're moving towards will be steeper and more severe. We see a few reasons for this in these specific market conditions.

Most NFT lending platforms work such that when a loan is liquidated (due to it becoming delinquent or expiring without being paid back), the NFT backing the loan is sold at auction. Because overall NFT volume is still nowhere near the highs of late ‘21, the asset is likely to sell at a fraction for what it was valued as loan collateral.

The similarity of many NFTs used as collateral may further exacerbate downward price pressure. Many NFT lending platforms only allow a small, often similar subset of collections to be used as collateral. Hence, when multiple loans are liquidated, elements of that subset will bear an outsized burden, tanking in value. (This is sometimes called *concentration risk*).

With that said, volatility isn’t necessarily a bad thing, and it should be expected of markets that have advanced financial instruments granting leverage. The fact that NFT markets are now subject to these swings suggests that the infrastructure enabling their financialization — unlocking their full power — is now coming online. Hence, a host of new opportunities are just over the horizon.

We are still in the early innings of this next phase of growth in NFT financial markets and the rate of innovation will only increase from here. In following pieces, we’ll go a bit deeper into tradeoffs between different mechanisms, minimizing downside exposure in leveraged NFT markets, opportunities to unlock the full value of NFTs in DeFi x NFTs, and more.

NFT markets are maturing. New NFT financial primitives coming online expand the capabilities of NFT leverage, derivative markets, and more. However, with these new primitives also comes increased volatility in NFT markets.

NFT Markets are Maturing: Welcome to the Era of Leverage and Volatility

Until recently, it’s been difficult to monetize NFTs (non-fungible tokens) beyond a one-time sale. 

[NFT lending](https://upshot.xyz/post/nft-lending-101) platforms offer an opportunity for NFT owners, creators, and collectors to monetize their digital assets without having to sell them, incur a tax event, and lose the potential long-term value. By borrowing against their NFTs, owners can secure loans and access liquidity in new ways with their digital assets. 

NFT lending is still a relatively new concept, but it has the potential to revolutionize how we think about NFT valuation and investments. This post will review a range of the best NFT lending platforms that can appeal to liquidity providers with different risk profiles.

## What is an NFT Lending Platform?

An NFT Lending platform is a decentralized application that connects lenders and borrowers of NFTs. Borrowing and lending terms, such as loan amount and APY may be set by an automated smart contract on the platform, a third party strategist, or negotiated peer to peer.  

However, what makes the NFT lending process different from a tradfi loan is that there is no official third party or intermediary to investigate your creditworthiness or verify your identity. You use the NFT as collateral to borrow ETH or ERC20 tokens like USDC.

On most NFT lending platforms, not only do the loans incur an interest rate that is paid to the lender of ETH/USDC, but also if a loan becomes delinquent or expires without being paid back, the NFT backing the loan is given to the borrower of the NFT or sold at auction and the funds are given to the loan provider. 

## Top NFT Lending Platforms

Whether you are new to NFT lending or an experienced investor, these lending platforms are a new opportunity for NFT collectors and creators to access capital quickly and securely.

### Upshot
![upshot logo2](//images.ctfassets.net/lhkcghnr8ql4/6DzNwyUok1TvCyS1THuPGj/155938a64c8c3f1652814b03b92913c3/upshot_logo2.png)

__Type:__ Three-actor-model

__Status:__ In development 

The Upshot platform is focused on providing innovative solutions to the rapidly evolving world of NFTs x Defi. Through our [appraisals](https://upshot.xyz/post/lending-strategies), [gmi scores (guaranteed market-value insurance)](https://upshot.xyz/post/ideas-to-build-on), and upcoming NFT lending opportunities, we make NFT financial markets more accessible. 

Upshot is partnering with [Astaria](https://www.astaria.io/) to provide cutting-edge lending experience that is both secure and transparent. Our [lending strategies](https://upshot.xyz/post/lending-strategies) have been carefully designed by a team of data scientists and ML algorithms to provide maximum value to both borrowers and lenders. Through our in depth market knowledge and our proprietary risk assessment algorithms, we are able to offer competitive interest rates while minimizing the risk of default.

Keep an eye out for our upcoming launch, and join us in shaping the future of NFT finance.

__Features & Benefits:__ 
- Expert 3rd party strategist to set the most favorable terms for both lenders and borrowers
- Real-time NFT valuation data
- NFT market trends and analytics
- NFT portfolio tracking and management
- Project-specific analytics and valuation data

[Get started with Upshot.](https://upshot.xyz/)

### Arcade
![Arcade logo](//images.ctfassets.net/lhkcghnr8ql4/2HgtCOitcT7B1iwSDAGA62/08a50b6e4a9663c3e7050cc43f5a2b49/Arcade_logo.png)

__Type:__ Peer-to-peer

__Status:__ Live 

[Arcade](https://www.arcade.xyz/) is a permissionless NFT lending platform that allows users to borrow and lend NFTs without any intermediaries. The platform supports a wide range of collections, including the popular Pudgy Penguins and Gutter Cats. Arcade's smart contracts ensure that borrowers get the best possible deals. 

__Features & Benefits:__
- Peer-to-pool NFT lending
- Multichain support
- Floor price protection
- Low fees

__Pricing Details:__
- Interest rates starting from 7.5% APR
- Maximum LTV ratio of 50%
- Minimum loan amount: $1,000

### NFTfi
![nftfi logo](//images.ctfassets.net/lhkcghnr8ql4/18HhmRF0mfQErLbhCnUAUA/0cec9e51e9fbd256022a6308dc3823af/nftfi_logo.png)

__Type:__ Peer-to-peer

__Status:__ Live 

[NFTfi](https://nftfi.com/) is a liquidity protocol that allows NFT owners to use their assets to access the liquidity they need. NFT owners receive secured wETH and DAI loans from liquidity providers in a completely trustless manner. The liquidity providers use NFTfi to earn attractive yields, or, in the case of loan defaults, to have a chance at obtaining NFTs at a large discount. 

__Features & Benefits:__
- Permissionless peer-to-peer lending platform
- Offers non-custodial loans with smart contract automation
- Supports various collections, including Cryptopunks and Bored Ape Yacht Club

__Pricing Details:__
- Interest rates starting from 4.95% APR
- Maximum LTV ratio of 80%
- Minimum loan amount: $100

### Astaria
![astaria logo](//images.ctfassets.net/lhkcghnr8ql4/2mdeD3htYRLBgI5Ce1PDeC/ed27760cdf1d0b32785e22212b5f1e53/astaria_logo.png)

__Type:__ Three-actor-model

__Status:__ In development 

[Astaria](https://astaria.xyz/) is a decentralized on-chain NFT lending platform that provides a seamless experience for native DeFi users. The platform uses a unique [three-actor model](https://docs.astaria.xyz/docs/threeactors) for lending. In this model, the strategist, borrower, and liquidity provider work together to ensure an efficient and secure lending process.  For example, a strategist can deploy a vault containing loan terms for certain NFTs. Borrowers can then take out loans against strategist-supported NFTs while liquidity providers earn interest on the funds they contribute to [PublicVaults](https://docs.astaria.xyz/docs/smart-contracts/PublicVault), which accept funds from other Liquidity Providers. 

Astaria features the ability to trigger a liquidation when a loan exceeds its duration, refinancing when a different vault offers better terms (such as an interest rate decrease of more than 0.5% or a duration increase longer than 14 days), and FlashActions that allow users to collect fees on their locked NFTs. 

Upshot will be partnering with Astaria to bring advanced ML NFT appraisal models to the platform. By providing accurate, near real-time appraisals for NFTs from over 32,000 collections, Upshot will help Astaria users make informed lending decisions.

__Features & Benefits:__
- Provides an open marketplace for NFT lending and borrowing
- Offers flexible repayment options and adjustable LTV ratios
- Partnership with Upshot for accurate appraisals 
- Allows for partial collateralization of loans
- Instant liquidity to borrowers
- Flexible loan term structure
- Refinancing based on improved vault strategy terms
- Liquidations
- Set maximum possible debt

__Pricing Details:__
- Interest rates starting from 5.5% APR
- Maximum LTV ratio of 70%
- Minimum loan amount: $500

[Get started with Astaria. ](https://astaria.xyz/)

### BendDAO
![BendDAO logo](//images.ctfassets.net/lhkcghnr8ql4/3cQqh3rlRx17C3MbaeW6gY/7ef596062436616e5b091e3b6b38d329/BendDAO_logo.png)

__Type:__ Peer-to-pool 

__Status:__ Live

[BendDAO](https://www.benddao.xyz/en/) is an NFT liquidity protocol that supports instant NFT-backed loans, collateral listings, and down payments. The platform's smart contracts ensure that borrowers get the best possible loan terms while keeping their NFTs safe. Since BendDAO offers down payments, borrowing, and listing all in one platform, it creates a closed loop for users looking for a one-stop NFT liquidity solution.  

__Features & Benefits:__
- Offers permissionless, peer-to-pool NFT lending
- Provides liquidation protection with overcollateralization and buyback options
- Allows for fractionalized lending and trading of NFTs

__Pricing Details:__
- Interest rates starting from 10% APR
- Maximum LTV ratio of 50%
- Minimum loan amount: $500

### Llamalend
![Llamalend logo](//images.ctfassets.net/lhkcghnr8ql4/6sdsWCKsrdQdRk34nBlwDq/44c272e61fbf20e62787db7b73cbc0fa/Llamalend_logo.png)

__Type:__ Peer-to-pool

__Status:__ Live

[Llamalend](https://llamalend.com/) is a decentralized NFT lending platform that offers collateralized loans to borrowers. The platform is built on the Ethereum blockchain and allows borrowers to use their NFTs as collateral to borrow cryptocurrency at a fixed rate.

Lenders pick any NFT collections to lend against, create pools, choose LTV they want to use, and determine the maximum duration of loans and interest rates. Borrowers can choose how long they want to borrow for and then receive $ETH equal to the minimum floor price of the NFT or NFT collection over the last seven days. 

Borrowers can repay that $ETH at any time before expiration to get their NFTs back. Otherwise, the loan defaults and the lenders will get the NFTs.

__Features & Benefits:__
- Supports lending and borrowing of NFTs from various collections, including Cryptopunks and Bored Ape Yacht Club.
- Offers flexible loan terms, including interest rates and loan duration.
- Provides protection to lenders through a transparent and secure smart contract-based lending process.
- Offers a simple and user-friendly interface for both lenders and borrowers.

__Pricing Details:__
- Charges a 5% fee on the interest earned by lenders.
- There are no fees for borrowers.
- Smart contract-based lending process that ensures transparent and secure lending.
- Liquidation feature to protect lenders in case of default by the borrower.

### Unlockd
![unlockd logo](//images.ctfassets.net/lhkcghnr8ql4/3P5qPMYfQp1apdvFKcp5Du/fba13430bb028bbc4345dd04aacc716b/unlockd_logo.png)

__Type:__ Peer-to-pool

__Status:__ Live

[Unlockd](https://www.unlockd.finance/) is a NFT lending platform that grants users to access the full value of their locked digital assets. It achieves this by unlocking the liquidity of non-fungible tokens (NFTs) and other digital assets, which can be used as collateral for loans, liquidity provision, and yield farming.

Unlockd provides a permissionless and transparent environment where users can set their own conditions for loans and have full control over their assets. It also protects lenders through collateralized loans and liquidation of assets in case of default.

__Features & Benefits:__
- Instant loans
- Yield Farming where one can earn yield on their assets by providing liquidity to the platform
- Unlock liquidity of NFTs access value that would otherwise be locked away
- Earn rewards in the form of its native token, $UNL
- Advanced Security
- Accessibility for anyone with an internet connection

__Pricing Details:__
- Interest rates starting from 7.5% APR
- Maximum LTV ratio of 50%
- Minimum loan amount: $500

### Nifty Apes
![Nifty apes logo](//images.ctfassets.net/lhkcghnr8ql4/6iVoWQv7yNSXj5oT4Eghj7/0b5b3ff29b25f9011d135674783670c1/Nifty_apes_logo.png)

__Type:__ Peer-to-peer 

__Status:__ Live

[Nifty Apes](https://www.niftyapes.money/) is a collection of unique, generative NFTs offering a range of benefits and opportunities. Each Nifty Ape is a distinct and one-of-a-kind digital asset, featuring a unique combination of attributes and characteristics that make it truly unique.

Nifty Apes also offers a range of utility features, including a marketplace and lending platform. Nifty Apes borrowers connect their wallets to view what loan offers are available for their NFTs on the platform, which they can sort by amount, duration, or APR. When lenders connect their wallets, they’ll have to deposit liquidity (that will earn interest whether it's in-use or available) and then can start making offers. 

__Features & Benefits:__
- Marketplace for users to buy, sell, trade, and lend NFTs 
- Seller financing
- Flexible smart contracts
- Exclusive events and opportunities
- Educational resources

__Pricing Details:__
- Interest rates starting from 4.95% APR
- Maximum LTV ratio of 80%
- Minimum loan amount: $500

### x2y2
![x2y2 logo](//images.ctfassets.net/lhkcghnr8ql4/3it8LgrhvorNuytWyueGOj/605b4e93cf1852b975648ddae3ebc3e8/x2y2_logo.png)

__Type:__ Peer-to-peer

__Status:__ Live

[x2y2](https://x2y2.io/) is a decentralized exchange platform that enables users to trade cryptocurrencies and other digital assets in a secure and transparent manner.  NFT that can be used as collateral must not be marked as stolen or removed on any other markets and must have received valid offers. Lenders then make loan offers that detail loan value, repayment value, duration, APR, and expiration time. 
X2y2 provides lending for both single NFTs and NFT collections. NFT collections must be within a whitelist and there is only a limited set of whitelisted collections open to loan offers. The platform wants to avoid collections with high volatility that are more likely to result in lender losses

X2yx’s vision is to give back to the community and rewards 100% of the market fees to its stakeholders.

__Features & Benefits:__
- Low trading fees
- Non-custodial
- Range of trading pairs and cryptocurrencies
- Advanced trading options such as limit orders and stop loss orders

__Pricing Details:__
- Interest rates starting from 5% APR
- Maximum LTV ratio of 50%
- Minimum loan amount: $1,000

### Renft.io
![renft.io logo](//images.ctfassets.net/lhkcghnr8ql4/6fS4LTKxOQYMLuIxMjAgSm/d7c52bc50c9fbdd32570c26a8fae4dcd/renft.io_logo.png)

__Type:__ Renting platform

__Status:__ Live

[Renft.io](https://www.renft.io/) is a renting platform that allows NFT creators to rent out their NFTs for a set period, enabling collectors to access and use these assets for a variety of purposes. This provides creators with a new source of revenue and exposure, while also enabling collectors to engage with and experience a wider range of NFTs. The platform also offers a unique feature where users can stake their NFTs to earn rewards.

__Features & Benefits:__
- Access to unique NFT that may not be available through traditional marketplaces.
- Flexible rental terms, enabling them to rent out their NFTs for a set period of time or a specific use case.
- Revenue sharing: RENFT enables creators to share in the revenue generated by the rental of their NFTs, providing them with an ongoing source of income.
- Smart contracts to facilitate lending, ensuring transparency and security.
- Liquidation feature that can protect lenders in case of default by the borrower.

__Pricing Details:__
- Renft.io charges a fee of 10% on the interest earned by lenders.
- Borrowers are charged a 2% origination fee.

## More About NFT Lending Platforms
![NFT platform](//images.ctfassets.net/lhkcghnr8ql4/58hra8EO5z9NORAMM0Uj2x/0f238d0df2efd7f2b84e16de27dc8363/NFT_platform.png)

### What is Peer-to-Peer NFT Lending?

Peer-to-peer NFT lending refers to a lending system where lenders and borrowers interact directly with each other, without the need for intermediaries. This type of lending allows borrowers to access more flexible customized loans while lenders can earn interest on their NFTs. 

### What is Peer-to-Pool NFT Lending?

Peer-to-pool NFT lending refers to a lending system where borrowers provide collateralized NFTs that are pooled together. Lenders can then lend cryptocurrency to the pool and earn interest on their investment.
This allows for less flexible lending strategies, but also more immediate loans since there is a pool of capital and NFTs to permissionlessly draw from.

### What are NFT lending smart contracts?

NFT lending smart contracts are self-executing contracts that are programmed to automatically execute certain actions when specific conditions are met. These contracts are used to facilitate NFT lending transactions, ensuring that lenders and borrowers are protected.

### Are there crypto lending platforms?
Yes, there are crypto lending platforms that allow users to lend and borrow cryptocurrency. These platforms are similar to NFT lending platforms, but instead of using NFTs as collateral, users provide cryptocurrency as collateral to access loans.

Crypto Lending platforms are what are often referred to as Defi. Upshot is building at the intersection of Defi x NFTs.

## Work with the Best NFT Lending Platform

NFT lending is a revolutionary new concept that offers endless possibilities for the future of finance. With the launch of NFT lending on Upshot.xyz, we are thrilled to offer our users the chance to be at the forefront of this exciting new movement.

We are committed to providing a secure and transparent lending experience for all of our users. By partnering with Astaria and leveraging our expertise in NFT appraisals and risk assessment, we’re able to become the premiere NFT lending strategist to support efficient and liquid NFT lending markets.

NFT lending represents an exciting new wave of DeFi possibilities. Join us in shaping the future of NFT finance and unlocking the full potential of this groundbreaking technology.

[Get started with Upshot. ](https://upshot.xyz/)


Discover the best platforms for borrowing and lending NFTs, and learn how to maximize your profits and minimize your risks. 

10+ Best NFT Lending Platforms

NFT rarity refers to an NFT possessing a unique and uncommon combination of traits within a collection. The more uncommon an NFT’s traits are within its collection, the rarer it is considered, and the more valuable it can be. 

NFT collectors used to rely on NFT rarity tools to determine the rarity (and value) of their potential investments–but now some consider NFT rarity platforms to be outdated. 

Why? And what are the right alternatives to NFT rarity tools? 

This article will review what NFT rarity tools are, some of the best NFT rarity tools to try, and new NFT platforms that are providing rarity data along with deeper insights into the [maturing NFT markets](https://upshot.xyz/post/nft-markets-are-maturing). 

## What Does NFT Rarity Mean?

[NFTs are non-fungible digital assets](https://uu.diva-portal.org/smash/get/diva2:1678476/FULLTEXT01.pdf) with unique identities. Since an NFT is considered a one-of-a-kind asset, it can be difficult to [determine the true value of every individual NFT](https://upshot.xyz/post/determining-what-matters-NFT-valuation) in the market.

A wide range of factors impacts the potential price of an NFT, including collection floor price, last sale price of the specific NFT, how active the community is, hype and more. As it sounds, NFT rarity refers to how rare an NFT is in the market and then within that specific collection. 

NFT rarity functions like real-world art. However, while a real-world artwork’s rarity depends on factors such as its history or creator’s story, an NFT’s rarity also depends on its unique traits which can be logged on chain.

When an NFT is newly minted (or uploaded on the blockchain), it is created with unique characteristics or properties that cannot be altered. These properties are called traits. Although every NFT is unique, they can still share traits. However, no two NFTs can be so identical that they share all of the same types of traits.  

A classic example of this is the popular Bored Ape collection. The [Bored Ape Yacht Club (BAYC)](https://www.cnet.com/google-amp/news/bored-ape-yacht-club-nfts-explained/) NFT project features cartoonized apes. While the collection uses the general idea of the ape as its theme, and a base NFT art style, no two apes are the same. Every ape sports a different skin (fur) color, expression, color, clothing, and accessory from the next. In a way, every ape is unique.

However, because some traits are limited within the BAYC collection, they are more difficult to come by. NFTs with these “limited” traits are referred to as rare assets.

## What Impacts NFT Rarity?
![rarity feature](//images.ctfassets.net/lhkcghnr8ql4/3vpG6bUeAWnwjaKzY670rO/9296f787bb2ec6d14b5584b11867f083/rarity_feature.png)

### Trait Rarity 

An NFT’s traits are referred to as its unique attributes. These traits are the features or characteristics that make up an NFT. While all NFTs have traits and can share the same traits with other NFTs within their collection, it is impossible to spot two NFTs with completely identical traits. 

NFTs with rarer traits or features in their collection are considered scarce and the most rare nfts in a colelction are often referred to as Grail NFTs. Because these rare traits are hard to come by, they are usually considered more valuable than the rest of the NFTs in that collection. 

An example is the Bored Ape Yacht Club’s (BAYC) psychedelic fur trait. Fondly known as “[Trippy Fur](https://finance.yahoo.com/news/trippy-fur-apes-remain-top-113032328.html)”, the psychedelic fur trait is one of the rarest traits in the Bored Ape collection, currently only occurring 77 times in the whole BAYC collection. As a result, the apes with this trait in the BAYC collection are more expensive to buy. 

### Supply & Demand

The NFT market functions [based on supply and demand](https://medium.com/intotheblock/the-nft-market-cooldown-as-supply-and-demand-imbalances-140428f47c91). Rarer NFTs are usually coveted in the market and because the supply of these NFTs does not meet the market’s demand, they’re more valuable. 

Of course, the popularity of the collection as a whole needs to be taken into account. For instance, Bored Apes are an incredibly popular collection of 10,000 Bored Ape NFT. As of the time of this writing their Floor price is sitting around 60 ETH. This means the cheapest (least rare) NFT in the collection costs 60 apes. More rare apes with traits like trippy fur, or laser eyes will sell for far more. 

## What Are NFT Rarity Tools?

NFT rarity tools are rarity-measuring softwares/sites that aid colelctors in making purchases. . They are software solutions that calculate NFT rarity and rank NFTs based on the results of their calculations. They usually function like databases where users can search for specific tokens, see the traits, and the percentage of other NFTs in that colelction that have those traits. 

Rarity tools help collectors determine the rarity and value of individual tokens within their collection. They can show how rare a token is in comparison to others and what factors contribute to its rarity score.  Rarity platforms usually have their own proprietary scoring system, meaning that while rarity rankings might stay consistent across platforms, the rarity score can differ.

### NFT Rarity Tool Examples 

Some rarity tools collectors use include: 

#### 1.  Rarity Sniper

[Rarity Sniper](https://raritysniper.com/) has filtering and sorting features supporting NFTs across 18 blockchains, such as Eth, Polygon, and Cronos.  It uses the average of an NFT’s individual traits to assign it a rarity value.

Rarity Sniper also supports various marketplaces, so investors can purchase NFTs on the rarity lists directly. 

#### 2. Rarity.tools

[Rarity.tools](https://rarity.tools/) adopts a different rarity calculation method from Rarity Sniper. While the former combines the power of various features of an NFT to grade its rarity, rarity.tools allow users to calculate rarity using the four major calculation methods. These methods include the trait rarity model, the mean trait rarity model, the statistical rarity model, and the rarity score model.

#### 3. NFT Stats Rarity Tool

The [NFT Stats Rarity Tool](https://www.nft-stats.com/rarity) is a simple NFT rarity tool that offers an overview of NFT collections and rankings. This ranking features hot collections along with their rarity rankings and sales volume. NFT Stats enables investors to explore top collections sold up to 30 days ago.

## How Rarity Features Work in NFT Tools

There is no single calculation formula that can be adopted to determine an NFT’s rarity. Different rarity tools use different methods, meaning an NFT’s rarity score will most likely be different across many rarity tool platforms. 

Here are some of the most common ways rarity tools and many NFT platforms calculate NFT rarity. Each expresses slightly different information about an asset’s relative position within a collection.

### 1. Trait Rarity Ranking

In the trait ranking method, rarity tools score NFTs using their rarest traits. Essentially, the rarest trait will be assigned a number. The rarer that trait is, the higher the NFT’s trait rank on the rarity tool.

While this method is straightforward, it is flawed. By ranking an NFT based on its rarest trait, the rarity tool ignores all other traits that the NFT possesses. It does not collectively assess individual traits of an NFT but only focuses on the rarest trait it has.

### 2. Average Trait Rarity

The average trait rarity method is a more collective strategy. Rarity tools that use this method focus on averaging the value of the rarity of all the traits an NFT possesses. 

For instance, if an NFT has two traits of 20% and 40%, the average rarity will be the total divided by two, which is 30%.

The average trait rarity method might be more accommodating than trait rarity ranking, but it still has its limitations. Because the NFT tool considers the overall trait rarity without assessing a single trait, which means it may miss out on the rarest NFT in a collection. 

### 3. Statistical Rarity

Statistics rarity is becoming popular across several NFT rarity tool platforms. It is a bit more complicated because it involves calculating rarity by multiplying individual trait scores. 

In this case, an NFT with two traits, both of which are 20% and 10%, will have an overall score of 2% [20% x 10%]. This method similarly emphasizes the total rarity of the traits, like the average traits method.

## The Challenges of NFT Rarity Tools

NFT rarity tools solved a major problem for which they were designed: determining which NFT is most rare. By easily and quickly calculating an NFT’s rarity, they help investors make better trade decisions and enjoy more profit in the NFT marketplace.

While this was helpful as the NFT space began to grow, these platforms no longer offer the effective solutions they were designed for. Now, many elements beyond simple trait rarity have come to effect the [price of an NFT](https://upshot.xyz/post/explaining-nft-pricing-machine-learning). That's why the industry is starting to rely on powerful machine learning [NFT appraisal models](https://upshot.xyz/post/how-upshots-ml-models-work) like the one we're building at Upshot.

Additionally, many rarity platforms do not consider factors other than rarity to determine the value of an NFT. This severely limits the ability of NFT traders to accurately gauge the true value of NFTs in the market by solely using an NFT rarity platform. 

## NFT Rarity on the Upshot Platform

[Upshot](https://upshot.xyz/) isn’t a rarity tool: it’s an appraisal platform that determines NFT value by extracting and tracking features including metatraits, asset rarity, and historical trait values. 

Rarity usually refers to the rarity of an asset within a collection (as opposed to across collections). Trait rarity describes how common a particular trait value is as a function of how many assets within a collection express that trait. 

Since individual NFTs can have many traits, Upshot goes a further step to reduce a set of rarity traits into a single asset appraisal value. Our models consume a variety of the trait rarity statistics we discussed above and many other factors including the influence of the community, specific collectors, and past sales data  to map from the trait space to the asset pricing space. 

We can also estimate trait value directly by calculating the average sale price per trait and using similar statistics as calculating asset rarity. This allows us to infer the relative value of assets based on the historic values of their trait composition. This measurement closely resembles rarity but is also much better at discriminating between sets of traits that may be equally rare but have different realized values in terms of how they trade.

Finally, we wanted a model that could adapt to changes in the market by tracking recent average prices. Upshot can do this not only at the collection level but also by breaking up the determined rarity and value metrics into buckets and tracking prices within those. 

Upshot has adopted a holistic NFT rarity score so that we can provide NFT appraisals with the highest accuracy. And it’s working: our performance is industry-leading, with Median Absolute Percentage Errors (MAPE) for the more popular and liquid collections, typically between 3 - 8% and ~11% on average for less-liquid collections. 

## The Future of NFT Rarity Tools

As the NFT metaverse continues to grow, so does the need for tools that help investors make better choices in trading. Although NFT rarity tools were game-changing at their release, many NFT trading and analytics software offer NFT rarity within their platforms. 

Upshot’s [machine-learning-powered appraisal system](https://upshot.xyz/post/how-upshots-ml-models-work) automates the NFT valuation process. Investors gain deep insights into the NFT markets through Upshot’s appraisal of over 57 million NFTs and over 32,000 collections. A market aggregator, portfolio tracker, proprietary gmi grading, liquidity access, and more, Upshot unlocks access to limitless DeFi possibilities. 

Interested in discovering the rarity and value of your next potential collection? 

[Join Upshot](https://upshot.xyz) to enjoy unparalleled appraisals and much more. 


Learn about what NFT rarity tools offer as well as the latest NFT rarity tool options in the space. 

NFT Rarity Tools: Everything You Need to Know 

Decentralized Autonomous Organizations, or DAOs, have been making waves in the world of finance and investment in recent years. These digital entities are designed to operate on a decentralized blockchain network and are run by smart contracts that automatically execute predefined rules and decisions. 

With the rise of blockchain technology and the [NFT market](https://upshot.xyz/post/nft-markets-are-maturing), and an increasing interest in [decentralized finance (DeFi)](https://www.techtarget.com/whatis/definition/decentralized-finance-DeFi), investment DAOs have emerged as a promising new way to invest in digital assets such as NFT tokens and cryptocurrencies.

This article will take a closer look at investment DAOs and how they work, including the benefits and risks associated with investing in them. We'll also explore some of the most popular investment DAOs currently in operation and provide tips on how to evaluate investment opportunities. 

## What is an Investment DAO?

Investment DAOs are comprised of groups of people who pool their resources together to invest in various digital projects and assets they may not have been able to invest in individually. The decisions on what to invest in are made democratically by members of the DAO, using a voting system that is executed by the smart contract. The rules and guidelines that govern the DAO's investments are also set by the members themselves. 

Unlike traditional investment funds or companies, investment DAOs are completely decentralized—there is no central leadership, and it is governed by the community. It is typically open to anyone who wants to join and become a member. 

### DAOs in the DeFi Space

DAOs and DeFi also share a mutually beneficial working relationship. DeFi, or decentralized finance, is a form of peer-to-peer finance enabled by various Layer-1 blockchain protocols, such as Ethereum, Avalanche, Solana, and Cardano. 

DeFi eliminates the need for intermediaries, such as banks and brokers, and allows users to self-custody their assets in their wallets using their private keys. This increases the speed and lowers the cost of financial transactions, and enhances the transparency of transactions.

Many DeFi applications are built on top of DAO structures. For example, a DeFi protocol that allows users to lend and borrow cryptocurrency can be built on top of a DAO that controls the governance of the protocol, including decision-making around how the protocol will be updated or improved. DAOs can also be used to manage funds for DeFi projects, such as investment funds or liquidity pools.

## How Do Investment DAOs Work?

DAOs function by providing a community-driven approach to investment, with rewards for members and a focus on long-term growth and success.  

All the resources in a DAO are managed by a predefined logic which can be modified by members using a democratic system. The purchase of assets and allocation of resources are designed to be transparent and user-centric. 

Here’s an overview of how they work: 
- __Creation__: An investment DAO is created by a group of individuals who come together to form a decentralized organization. The DAO is created on a blockchain, such as Ethereum, using smart contracts that govern how the DAO operates.
- __Funding__: Members of the DAO pool their resources by contributing cryptocurrency to the DAO's treasury. This provides the DAO with capital that can be used to make investments.
- __Governance__: Members of the DAO have voting rights and can participate in decision-making processes that determine how the DAO's funds are invested. This can include voting on which assets to acquire, when to sell assets, and how to manage the DAO's portfolio.
- __Transparency__: All transactions and decisions made by the DAO are recorded on the blockchain, providing transparency and accountability to members of the DAO and other stakeholders.
- __Rewards__: Depending on the DAO's structure, members may receive rewards for their participation and contributions to the DAO. This can include a share of the profits generated by the DAO's investments, or other incentives such as tokens or other assets.

## What Are Investment DAOs Used For?

Investment DAOs are often designed to invest in digital assets, but they can also be used to  invest in traditional assets such as stocks or real estate.

### NFTs

Collector DAOs are when individuals pool funds to acquire and issue NFTs. For example, [APE DAO](https://t.co/vsgMPHWuEZ) allows for the fractionalization of NFTs so multiple users can own a fraction of the same asset. 

DAOs can also help raise funds and create engaged communities for different NFT projects by allowing people to determine the most profitable projects. Members get to determine the investment direction through token-based voting. DAOs also create incentives and rewards that encourage members to participate. This can support community governance and also help smaller projects or creators develop a dedicated community. 

### Other Crypto Projects

DAOs are not limited to any specific category, and their utility can extend across various use cases, including protocols, philanthropy, publishing, and even social media.

Some notable DAO projects include [AssangeDAO](https://assangedao.org/), which helps in supporting WikiLeaks and its founder by accepting cryptocurrency donations. 

[VitaDAO](https://www.vitadao.com/) supports biotech scientists by investing in longevity research through an IP-NFT, and The LAO is an investment fund that supports the blockchain ecosystem.

### Real Estate

Real estate DAOs create a platform for users to manage the administrative environment of a property,  by tokenizing the asset. Through tokenization, the barrier to entry for real estate investments is lowered and allows investors to purchase fractional ownership of a property. Members can buy stakes in properties for as low as $50. These tokens provide holders with voting rights in decision-making processes, such as repairs and maintenance. 

This process also brings transparency to the siloed market, as all transactions are recorded on a blockchain ledger. Users can also benefit from increased liquidity and lower transaction costs associated with traditional real estate investments. Examples of real estate DAOs include Lofty AI, Arrived Homes, and Vesta Equity.

### Startups

Startups and institutional investors are leveraging DAOs to build a new model for community action on the internet.  Through built-in governance and treasury management features, they allow members to contribute funds in exchange for equity or voting rights without having to go through traditional channels.

Venture capital firms are further exploring new methods to attract more funding and participants into the space. One of these is the use of [hybrid DAO financing models](https://academy.moralis.io/blog/business/why-businesses-should-adopt-a-hybrid-dao-model) that imitate initial coin offerings (ICOs).

## Benefits of Investment DAOs

Investment DAOs offer several advantages over traditional investment funds or companies, including:

### Democratization & Inclusivity 

DAOs provide a platform for individuals from all over the world to come together and pool their resources to make investment decisions. Since DAOs operate on the blockchain, they are accessible to anyone with an internet connection regardless of geographical location or social status. 

### Transparency

DAOs operate transparently on the blockchain, allowing members to track all investment decisions and financial transactions. This transparency ensures that all members have visibility into the DAO's operations, reducing the risk of fraud and mismanagement.

### Lower Fees 

Investment DAOs can offer lower fees than traditional investment vehicles, such as mutual funds or hedge funds. Since DAOs operate on the blockchain, they can eliminate many of the costs associated with traditional investment vehicles, such as administrative fees, fund manager salaries, and middleman fees.

### Risk Diversification 

Investment DAOs allow members to pool their resources and invest in a diversified portfolio of assets, reducing the risk of losses due to the failure of any individual investment. This diversification can help to protect investors from market volatility and ensure a more stable return on investment.

### Liquid Investments 

DAOs can provide investors with access to liquid investments, such as cryptocurrencies or other blockchain-based assets. Since these assets are traded on public exchanges, they can be bought and sold quickly and easily, providing investors with greater flexibility and liquidity.

## Investment DAO Risks

Despite the numerous advantages, investment DAOs also carry some risks. 

- __Smart contracts__: If there are flaws in the smart contract's code, the DAO could be vulnerable to hacking, bugs, or other technical issues.
- __Regulatory risks__: The regulatory environment for DAOs is still uncertain in many jurisdictions. This uncertainty could result in legal or regulatory action that could impact the DAO's operations. 
- __Market risks__: Like any investment vehicle, DAOs are subject to market risks, including volatility, liquidity, and losses. 
- __Reputation risks__: DAOs operate on the blockchain, which means that all transactions and decisions are visible to the public. This can make it more susceptible to attacks from hackers, which can damage reputations and impact a DAO’s ability to attract new members or investments.
- __Fraud__: Some DAOs can be used as an avenue to trick people into fraudulent investments. 

## Investment DAOs to Know in the NFT Space

As NFTs and crypto have become a more mainstream investment opportunity, there are several prominent Investment DAOs to know in the NFT space.

### 1. SquiggleDAO
![squiggle dao logo](//images.ctfassets.net/lhkcghnr8ql4/3HsJ74gZx83cAbhNVsqTc2/124615d73dcedd0b9ddb1abe1a136084/squiggle_dao_logo.png)

[Squiggle DAO](https://www.squiggledao.com/) is a digital art organization focused on collecting, curating, and investing in generative art and NFTs. It seeks to improve users' access to crypto art and NFTs by tokenizing artwork and allowing artists to maintain their ownership of the work while sharing in its rewards. 

Squiggle DAO aims to build a sustainable digital art ecosystem that benefits both artists and collectors. Squiggle NFT serves as the pass to Squiggle DAO, and it currently has a floor price of 12ETH.

Also Read: [The Ultimate Buying Guide for Chromie Squiggles](https://upshot.xyz/post/buying-guide-chromie-squiggles)

### 2. PleasrDAO
![PleasrDAO logo](//images.ctfassets.net/lhkcghnr8ql4/2WjVJYJqv7LOzQYlpli3t5/230c5f20abec6f15ca036ca9b5b35e4f/PleasrDAO_logo.png)

[PleasrDAO](https://pleasr.org/#) is a collective of DeFi leaders, NFT collectors, and digital artists that acquire culturally significant pieces. The DAO's mission is to collect digital art that represents important ideas, movements, and causes. PleasrDAO is experimenting with community and fractional ownership of art, using DeFi to add and disseminate value. The group has also been launching live auctions with notable figures such as Edward Snowden and Daniel Ellsberg.

### 3. Flamingo DAO
![Flaming DAO logo](//images.ctfassets.net/lhkcghnr8ql4/3smEuUOOgmU2XEZLoOzNsX/61c2748d3a477794c404f558ac771623/Flaming_DAO_logo.png)

[Flamingo](https://docs.flamingodao.xyz/) is a DAO exploring investment opportunities for blockchain-based assets. These NFTs include digital art, collectibles, in-game assets, and other tangible assets that help create, monetize, and incentivize online content.  As of 2022, Flamingo’s portfolio included 215 CryptoPunks and 22 Bored Apes, with an estimated value of $1 billion. 

### 4. Bit DAO

[BitDAO](https://www.bitdao.io/) is an open platform for proposals voted on by BIT token holders, supporting the builders of the decentralized economy through pledged contributions, product development, specialized initiatives, R&D labs, and token swaps. It is governed by token holders and focuses on principles of community-driven decision-making and collaboration.

### 5. Davinci DAO

[Davinci DAO](https://davinci.gallery/) is a decentralized autonomous organization that aims to foster creative collaboration and innovation in the arts and cultural sector. It was founded by Misha da Vinci, an experienced web3 leader, and is supported by a community of holders. Davinci DAO provides a platform for community-driven decision-making, funding, and support for artists and creators, with a focus on empowering marginalized groups and promoting diversity and inclusion.

## How to Make Your Own Investment DAO

![portait](//images.ctfassets.net/lhkcghnr8ql4/1AerkBWodRZvqU5WImMUCG/fb37726dd80306c70bf215257fd5a1fb/portait.png)

### 1. Encode & audit a smart contract

Encoding a smart contract:

1. Write the smart contract code using a programming language suitable for smart contracts, such as Solidity.
2. Compile the code into bytecode, which is the low-level code that can be executed on the blockchain.
3. Deploy the bytecode onto the blockchain using a tool like Remix or Truffle.

Auditing a smart contract:

- Review the smart contract code to identify potential security vulnerabilities, such as reentrancy attacks, integer overflows, or unauthorized access.
- Use a tool like MythX or Slither to perform automated security checks on the smart contract code.
- Conduct a manual code review by a team of experienced smart contract developers to identify any potential issues that may have been missed by automated tools.
- Test the smart contract using a testnet or private blockchain to simulate different scenarios and ensure that it functions as expected.
- Have the smart contract audited by an independent third-party auditor who specializes in smart contract security.

### 2. Determine rules of governance

DAOs must identify the key decisions that need to be made and the criteria for making them. This involves determining the roles and responsibilities of token holders, developers, and other community members. Once these roles are defined, the community can create a set of rules and procedures for decision-making, such as a voting system or a proposal process. 

### 3. Use a DAO management platform 

DAO management platforms guide you through the process of creating a DAO in straightforward steps. 

Using these platforms, there's no need to build a smart contract from the ground up. They essentially serve as a bridge between you and the blockchain, allowing you to deploy your DAO without any coding. 

Some of the most frequently used platforms for creating a DAO include:
- [Syndicate](https://syndicate.io/)
- [Colony.io](https://colony.io/)
- [Aragon](https://aragon.org/)

### 4. Incorporate appraisal capabilities 

Appraisal capabilities are crucial for DAOs and other funds investing in NFTs due to the infrequent trading of NFTs, which makes it difficult to determine the net asset value (NAV) of underlying assets and the price of ERC-20 tokens issued to investors. 

To fetch data about the current market price of an asset or the value of a particular index, a DAO can use machine learning models. [Upshot](https://upshot.xyz/post/how-upshots-ml-models-work) provides the easiest alternative to incorporating appraisal capabilities without having to build one from scratch. 

By utilizing Upshot's appraisals, DAOs can establish an accurate estimate of the value of NFT holdings, create a specific fund admin function for NFT investments, and make informed decisions through the purchase of fairly priced assets. This transparency enhances investor confidence and ultimately supports the growth of the NFT market.

### 5. Raise tokens or other funds

There are several ways to raise funds through a DAO, including:

- Initial Coin Offering (ICO)
- Community funding
- Token sales

When a member of the DAO submits a proposal for a new initiative or decision, the proposal is deliberated and voted on. Each token holder is given a certain number of votes that is proportional to the value (ERC-721) or number (ERC-20) of their tokens. 

If the proposal receives a majority of the votes, it’s implemented by the DAO. Proposals may typically include changes to organizational operations, such as hiring employees, developing new projects, or acquiring assets.

## Other Opportunities for Investment DAOs & NFTs

Upshot assists investment DAOs to find the right assets to put their money in. With over 74 million assets from over 67,000 collections appraised and refreshed hourly, Upshot is an Industry-leading NFT appraisals and financial tool for the entire NFTxDeFi space. 

You can leverage Upshot’s cutting-edge technology by: 

- __Deal finding__: Discover the best deals in the NFT market with Upshot's appraisals seamlessly integrated into our NFT aggregator. 
- __Real-time portfolio tracking__: Keep a pulse on the value of your NFT portfolio with our near real-time appraisals, and make adjustments based on the latest market trends.
- __Build smarter trading strategies__: Gain an edge in the market by using Upshot's API. Our appraisals, liquidity analyses, and advanced stats can help you increase your chances of success.
- __Identify and track smart collectors__: Our novel grading index for NFT wallets, known as gmi, helps you identify and track the smartest collectors in the market. Use this information to stay ahead of the competition.

[Get started with Upshot.](https://upshot.xyz/) 

  Learn about the advantages of using NFT Investment DAOs and how they can help you maximize your returns. 
