Rocket signs off the first ever domain name backed loan ⌨️🚀
— Rocket (@RocketNFT) April 15, 2020
Brantly Millegan – COO of ENS – is the receipt of a $1000 loan (priced in wETH) in exchange for his coveted brantly.eth ENS domain. In exchange for the loan, Brantly will need to repay the loan in full plus 15% interest in 90 days (by July 14, 2020).
What Makes This Unique?
For those unfamiliar with ENS, you may have seen a suite of customized Ethereum addresses like alex.eth or argent.xyz – all of which allow users to send Ethereum-based assets to one another in an intuitive Venmo like fashion. With the ability to add subdomains, we’ve seen companies capitalizing on the leasing of domains, effectively creating a web of tailored web3 addresses.
What’s less commonly known is that each ENS domain has two different addresses, a Registrant and a Controller. While both of these addresses are commonly owned by the same person, this is where the unique aspect of Rocket comes into play.
“The Registrant is the ultimate owner of the name and has the ability to set who the Controller is. The Controller is who is able to set the records of the name (e.g. set which cryptocurrency addresses to which the name resolves). In this case, I was able to transfer the Registrant power over to the Rocket LP DAO multisig wallet but keep myself as the Controller. This means that while Rocket LP DAO now owns the name and could remove me as the Controller if I default on the loan, in the mean time I can continue to manage and use the name. This is akin to how when you buy a car with a loan, the bank holds the title but still lets you use the car while you’re paying it off.”
Unlike other NFT-based loans like Decentraland LAND in which custody must be transferred from one address to another, this particular loan allows the owner to continue using his domain name throughout the course of the loan.
Similarly, it places the power of being able to change controllers (and liquidate if needed) to the Registrant – in this case Rocket LP DAO. What emerges is a trust mitigated cycle in which a sentiment NFT is backing a loan, without having to actually release the usage of that NFT.
Regarding the loan, Brantly stated:
“It was great working with Alex and the rest of the members of Rocket LP DAO to make this happen. This is a great demonstration of how ENS names seamlessly fit into the rapidly expanding universe of services that use Ethereum-based NFTs, one of the unique benefits of running a naming system on Ethereum.”
The Bigger Picture
Across the board, new ways to manage and lease NFTs are one we’re quite excited about here at DeFi Rate.
In the most recent round of Gitcoin Grants, we donated to a project called Loan Shark – creating a way for users to lease NFTs to different addresses without having to worry about that party running off with the asset. The TLDR is that an NFT is sent to an address for a predetermined amount of time in exchange for interest payments from the borrower. At the end of the loan or if they fail to repay, a smart contact can revert the NFT back to the owner.
Check this out! @BlockRocketTech team exploring NFT leasing, enabling trustless & secure lending and borrowing of NFTs where you stream the payment by the second. Fund this Grant with any spare DAI you have. @gitcoin https://t.co/7lTlWVC9xy
— KnownOrigin.io (@KnownOrigin_io) March 24, 2020
Tying into the larger narrative of Rocket and ENS, it’s evident that NFT comparability is keeping par with the wider DeFi ecosystem when it comes to unique opportunities to leverage new financial primitives.
To keep up on all things Rocket, be sure to follow their Twitter.
Cooper is the Editor of DeFi Rate and an active contributor to leading DeFi media outlets like The Defiant, DeFi Pulse, and Bankless. He works with early-stage teams through Fire Eyes DAO to incubate governance models and grassroots community development. He is an ambassador to Set Protocol and an author of a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.