Hi @joshman91!
I had not heard of either Bullionix or Icecap Diamonds before, but thank you for sharing as these are both interesting examples of NFT commodities. I can see that Bullionix has a DGX token like you pointed out which represents a gramme of gold. I believe that chainlink can be used alongside commodity NFTs to ensure that market rates are accurate.
Non-fungible tokens in general are possibly a hurdle for AAVE. The assets that can be deposited and borrowed on AAVE to this date are all fungible. We should perhaps discuss the implementation of NFTs into AAVE further.
My thoughts are that NFTs could possibly be used as collateral on AAVE. In order for this to be made possible however, we will need some sort of accurate valuation for these assets that is resistant to manipulation.
I would draw comparisons to physical works of art being used as collateral. This market has emerged somewhat recently just over the past two decades, from what I’ve read. I found this paper written in 2018 to be useful:
One of the complications that faces this market and which I believe would also face NFTs is valuation. Deloitte have reported extensively on the relationship between art and finance this past decade. It seems that although the industry is working to improve transparency and trust, there are still issues relating to standardisation when it comes to valuation. The consequence of this being that there are still concerns over price manipulation within the market. Deloitte’s 2019 report on art and finance can be found here:
Maybe we can overcome such challenges with cryptocurrency? Historic transactions for NFTs will be openly available on the blockchain and I am aware that chainlink is working with NFT valuation per this blogpost: https://blog.chain.link/create-dynamic-nfts-using-chainlink-oracles/
I’ve strayed far from commodities in this post and I apologise, but given the recent uptick in NFTs I believe that sooner or later we should have a broader discussion on this within the AAVE community.