A Polygon-based lending platform will use blockchain technology to solve the liquidity issues luxury collectible item owners face when converting their assets into cash.
Davide Rovelli, an adviser to asset-backed lending platform Altr, told Cointelegraph that luxury item collectors face several problems when converting their assets into cash. When selling to dealers, collectors could receive lower offers as dealers need to profit when reselling the items. Taking the auction route could raise better prices but also takes a lot of preparation and requires the payment of third-party fees.
The executive believes that blockchain can play a role in solving these hassles for collectors. According to Rovelli, collectors can digitize their collectibles, create a digital certificate of ownership within the blockchain and use the digitized assets as collateral to obtain loans on-chain quickly. Rovelli explained:
“The blockchain gives the opportunity to access on-chain liquidity that has never played a role in the traditional market of collectibles. By bringing this world on-chain, crypto holders, crypto funds and VCs [venture capitalists] can be exposed to the luxury collectibles space.”
The tokenization of real-world assets (RWAs) has been a growing topic of discussion in the crypto space. When asked about the importance of tokenization, Rovelli shared that it gives an “extra layer of transparency in a sector where transparency was never the strength.”
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He added that this allows users to bring assets on-chain after they have been certified, valued and stored. This allows enhanced security and almost instant liquidity as users could use the digital tokens representing the assets as collateral for blockchain-based loans. Rovelli believes that this approach unlocks the economic value of luxury items and represents a shift in leveraging luxury assets in the digital age.
Rovelli also argued that Web3, which focuses on transparency and security, aligns well with the needs of the luxury industry. This is because Web3 offers ways to “confirm the genuineness of high-end products” and track their history. A Web3-based system could make it “almost impossible” to fake luxury goods, according to Rovelli.
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