The market for tokenized Pokémon cards has heated up, but turning those digital collectibles into mainstream DeFi collateral faces practical limits.
Marketplaces such as Courtyard — which mints NFTs tied to physical cards on Polygon — have seen sharp growth. Courtyard reported roughly $78 million in monthly sales last month, a jump many in the space view as a sign that collectibles can thrive on-chain. Other platforms issuing similar NFTs include Collector Crypt and Phygitals on Solana, plus projects like RIP.FUN on Base.
That momentum has inspired builders like a pseudonymous developer known as Keef, who is exploring a lending product that would let collectors use tokenized cards as collateral to borrow funds to buy more cards. The idea is simple: unlock liquidity without selling prized items, and let collectors leverage holdings to expand their collections.
But industry insiders and platform founders warn the utility of such loans may be limited in practice. Courtyard CEO Nico le Jeune says lending makes sense mainly for high-value cards — think six-figure items — because loans against lower-value cards produce marginal economic benefits for retail users and introduce frequent liquidation risk.
Key hurdles include:
- Valuation complexity: Prices for collectible cards come from off-chain marketplaces like eBay and TCGPlayer, not a single on-chain floor price, making automated lending riskier.
- Custody risk: Physical cards must be stored and insured; custodians could abscond or mishandle assets, undermining the token’s backing.
- Market fragmentation: Multiple blockchains and standards mean any lending product must support Polygon, Solana, Flow, and more to reach broad liquidity.
Some bespoke lending platforms already support individual deals — Teller facilitated a $53 loan against a token tied to a $300 card back in 2023 — but those are negotiated case-by-case and can end in liquidations that transfer physical assets at steep discounts.
For collectors and DeFi builders, the takeaway is cautious: tokenized cards open intriguing paths for exotic RWAs (real-world assets), but practical adoption of lending infrastructure hinges on reliable pricing, robust custody, and user-friendly risk controls.
Source: Decrypt. Read the original coverage for full details.