Hey there! In a recent article, we briefly described Sodium’s Hybrid Liquidity flow and processes. In this post, we’re going to dive into one of the features of Sodium that NFT chads who trade or hold long-term will appreciate most — Retained Utility.
Before we get into the nitty-gritty details, let’s define “Retaining Utility” in regard to NFTs.
Most not-complete-garbage NFT projects give exclusive perks to holders of their NFTs, aka utility. The benefits of utility vary widely, from accessing gated communities on Discord, to claiming airdrops, to using the asset as hexagonal PFP on Twitter. The thing is, you don’t want to lose access to all this important functionality when you collateralize your NFT to get a loan.
When we talk about “Retaining Utility”, it simply means that your collateral is going to be stored in your own personal Sodium Wallet. The Sodium Wallet uses ~magic~ to connect to any dApp–it’s just like using your own Metamask account. The only key difference is that NFT collateral cannot be transferred or sold from the Sodium Wallet during the loan term. Your NFT collateral will be automatically sent back to the original wallet once the loan is repaid.
How do I create a Sodium Wallet?
No need to do anything! A unique Sodium Wallet is automatically created when a user issues their very first Loan Request. Wallet creation requires a minimal amount of additional gas, but only needs to be created once. Thereafter, collateral for every requested loan will be transferred into that wallet, and won’t be required to pay a wallet creation fee again.
This design is not only adding mentioned benefits but also increases the overall security of the protocol by isolating every borrower’s collateral into a personalized Sodium Wallet.
How do I use my NFT during the Loan Term?
Alright, you got yourself some liquidity, now let’s keep using that NFT! Head over to the “Borrowing” page and click “Use Pledged NFT”.
You will see a new tab with the Sodium Wallet interface — follow these steps to connect the wallet to any third-party dApp.
After the wallet has been connected successfully, the NFT can be used as PFP on Twitter, in P2E games, to claim airdrops, or for verification to access holder communities (i.e. Collab.Land).
We are working tirelessly on further improving Smart Wallet functionality by extending the list of allowed mechanics and smart contract methods for different collections. Would you like to do something like “Nesting” for your Moonbird collateral?
Congrats Degen, you’re now one level ahead of your NFT frens.
