 allows for every different person, no matter what their risk tolerance is, to participate in the NFT market. And it doesn't take a rocket scientist to see that there's gonna put immense demand pressure in this whole space. Hi everyone, it's MJ, the fellow actuary. And in this video, I wanna talk about the delayed transfer function, which we might be seeing in NFTs in the future. Now where this all came about was I was in East Denver and asked to present on NFTs with regards to collateral. And the idea here was that we could use NFTs as collateral for loans. And smart contracts can be set up kinda like as an escrow account where the holder of the NFT transfers it there. And if they do not make their loan repayments in time, then that NFT is forfeited and sent to the lender. Now the problem with this approach is that by sending your NFT to this escrow smart contract, you are removing ownership. And with NFTs, that's something you don't necessarily wanna do, especially if you need this NFT to get access to specific Discord channels, if you wanna use it as your Twitter profile picture. But probably more important, it's all of the various airdrops, other NFTs, tokens, and a whole host of other benefits that you can get by having ownership. So by using your NFT in a loan collateral with an escrow third party account, not only are you paying probably a little bit of a fee to do this, but you're also removing ownership for the duration of the loan, which then got me thinking, what if we could create a delayed transfer function within the NFT? What this would mean is let's say I have a board a Biot Club and I wanna raise $100,000, whatever the price is at the moment, then what I can do is I can go to the market, say, look, I'm looking for $100,000, I'm prepared to repay it in six months time with a 10% interest rate who is willing. And the market can either accept this counter, market forces will determine what is the appropriate interest rate for the specified duration. But let's say it goes ahead and someone gives me $100,000, I now have a six month window in which to repay that $100,000 plus an additional $10,000 if I wanna prevent my board a Biot Club from being transferred to the lender in six months time. What's gonna happen is during the duration of the loan, I'm still gonna have ownership of that board a Biot Club. And this is important, like I say, for the various airdrops, the benefits of having your Twitter profile picture, et cetera. Of course, what we would want this function to do is to kind of freeze the other functions of the NFT. So you can't have a delayed transfer function on one person and then go sell it on OpenSea. And then the lender's like, wait, what happened to my collateral? So this function would have to override and freeze the other functions to prevent transfer going to another party. But essentially what will then happen is at the end of the six month period, if I've got that $100,000 and interest repayment, I can make it back to the lender, the delayed transfer function is then canceled, the NFT is then unfrozen and I can use it as before. Whereas if I don't make it, then that NFT is paid to, well, that NFT then gets transferred to the lender as their collateral. And that's all fun and everything. But then I was thinking, wait, this delayed transfer function has got more utility than just being used as collateral for a loan. In a strange way, it can also act as a put option on NFTs. And instead of thinking of it as an interest repayment, you can think of it as you're paying a premium for the option to sell an NFT at a specified price over a certain duration. What do I mean by that? Let's say I buy again into Borde Bloc Club and let's say the current price is $100,000. Now, let's say I'm also a little bit risk adverse. I don't wanna lose $100,000 if this NFT project goes all the way down to zero. In fact, the most I'm prepared to lose is $20,000. So what I can do is I can set up a delayed transfer function set it at $80,000. And now in this case, the interest rate would be quite low or now we'd be referring to this amount as a premium. And we could say, hey guys, I will buy back this or cancel this thing for $1,000. So after the duration, let's again stick to six months, I'm gonna pay back $80,000 plus $1,000 in order to cancel the delayed transfer. Now, what this means is for $1,000, I've essentially purchased the option to sell this NFT within the six month period at the specified price of $80,000. And now if the NFT floor price just something happens and it shoots down to $50,000 or below $80,000, then I simply just abandon any plan to cancel this, you know, this delay transfer function. I let it go through and I've got the $80,000, I don't pay the premium of $1,000. And you know what, I can use that $80,000 and go purchase another board API club if I want to for $50,000 and I'm back in the game. Or I can just step away and say, well, okay, NFTs aren't for me. Now, I know this is a little bit convoluted, quite confusing, it's delayed transfer function that can be useful collateral of loan and also now as going, you know, long on a put option, like it's like, okay, wait, this is getting quite confusing, is this really necessary? And I would say that it is because what we're doing is we're introducing a bit of risk management. We're allowing people to basically decide how much risk they're wanting to take on. And we all know various people have various risk tolerances, various risk appetites. And the general population, it is assumed by financial theory that we are risk averse. And NFTs are inherently risky. Now, if we can implement risk measures so that people can better manage their risk, then what we're gonna see is potentially, and of course it requires the education and more people to figure out how these things will work on board to the blockchain. But essentially what we could do is we could have this risk management tool in such a way that it allows for every different person, no matter what their risk tolerance is, to participate in the NFT market. And it doesn't take a rocket scientist to see that there's gonna put immense demand pressure in this whole space. So delayed transfer functions, not only they're great to unlock extra utility of an NFT, being allowed as collateral for a loan, not only can you use them for some interesting trading strategies, but also they could open the door for the masses and the rest of the population that wants to engage with NFTs, but at the moment it's feeling like, ooh, this is just a bit too risky. Now the delayed transfer function can manage their risks and make NFTs accessible to a whole bunch of other people. And like I say, put a lot more demand pressure in this whole space. Anyway, just some thoughts. I've actually articulated this a lot better in a medium article, which I'll put at the bottom of this video if you wanna read through, gives a little bit more examples, and it might be a little bit easier to follow along than just me chatting away about it. But as always, thank you so much for watching and I'll see you all for another video soon. Cheers.