LuxFi’s Ecosystem
By: Luxfi Official
Tags: Nft, Luxfi, Blockchain, Cryptocurrency, Ecosystem

LuxFi is one of the world’s largest DeFi ecosystems for luxury assets. It is an innovative, secured, and highly accessible platform, where everyone can create NFTs that are backed by real-world luxury assets for buying/selling, collateralized lending, auction trading, and fractional fundraising in the LuxFi ecosystem.

The ecosystem of LuxFi involves four major trading platforms. Those platforms illustrate the main functions of the LuxFi ecosystem and its utility for the luxury industry in general.

The Ecosystem

NFT Marketplace for Luxury Items

LuxFi incorporates product traceability in the system by linking physical assets to their virtual NFTs. Digital profiles of the items are created, permanently stored on the blockchain, and visible to everyone once published. In order to determine the pricing of the NFT, our data intelligence system collects real-world data from global sales channels and social media platforms. At every stage of the process, the marketplace ensures the safety of transactions for both the buyer and the seller, and our verification network avoids the circulation of counterfeit items.

2. Collateralized Lending

By using product fingerprint technology, the real-world luxury asset is physically linked with its virtual NFT, and this real-world asset-backed NFT can be deposited as collateral. The owner will get up to 70% of the collateral actual value and pay an interest rate based on the market trends and demand of the real-world collateralized item.

The owner can redeem the collateralized item once the loan is fully paid back. This will reduce the default risk for the lender and open new possibilities of circulation, increasing the liquidity of idle real-world assets.

3. Fractional Fundraising

With a physical item, there is often one owner only. What if a single item could belong to multiple owners? Through NFTs, there is the possibility to fractionalize a virtual asset, resulting in increased possibilities and accessibility to the public when it comes to high-value collectible items, such as artworks. This allows numerous investors to invest in a single item, facilitating fundraising for new investments and potentially increasing its value.

4. NFT Liquidation Auction

If the borrower defaults on the loan, the NFT/physical item will be sent to the liquidation auction on LuxFi NFT marketplace to be sold to our members and second-hand retailers in LuxFi’s network. Funds earned via the liquidation auctions will be used to pay back the lender, plus the accrued interest.

How Do The Platforms Work Together?

The workflow of the different trading platforms can be demonstrated through a simple case scenario.

Alice wants to turn her real-world luxury asset into an NFT. In order to do that, she has the choice to hand the physical item to a professional verifier in LuxFi’s network or an AI authentication device is shipped to her for the product authentication.

During the process, the product fingerprint is collected from the item and that is for linking the real-world asset with its virtual asset (NFT) on the blockchain. LuxFi then uses real-world data to provide accurate pricing of each NFT. An anti-forgeable NFT card containing a unique QR code is provided to her after the product profile is created and secured on the blockchain.

Afterwards, the physical luxury asset is redeemed and sold through the NFT marketplace to Elaine, who becomes the new owner after the NFT ownership is transferred. Elaine has the option to divide the NFT into parts, and sell some of it to reinvest into new assets, or she can use the NFT for collateralized lending in LuxFi’s platform.

Lastly, If she pays back the loan, the physical item will be returned to her. If she fails to pay the loan back, the item will be sent to the liquidation auction on Luxfi’s NFT platform.

LuxFi aims to empower real-world luxury asset owners to have more control over their assets by providing multiple secured and efficient financing services.