This discussion proposes SANDLend, a decentralized savings and loan service integrated into The Sandbox ecosystem. SANDLend will enable users to deposit $SAND to earn interest (savings) and use Blue chip NFTs and Sandbox NFTs (e.g., LAND, ASSETS) as collateral to borrow liquid $SAND loans. Building on the existing $SAND staking service, SANDLend aims to increase $SAND circulation, expand its utility, and stimulate economic activity by unlocking NFT liquidity while offering a complementary yield mechanism for the community.
Motivation
The Sandbox is a leading metaverse platform with millions wallet registrations, a thriving NFT marketplace, and an established $SAND staking service that rewards users for locking tokens to support the ecosystem. While staking provides a solid foundation for $SAND holders, additional mechanisms could further enhance token utility and circulation:
Many users hold valuable Blue chip NFTs, LAND and ASSETS but lack liquid $SAND to invest in development or marketplace purchases.
The current staking service, while effective, offers a single yield option, leaving room for diversified financial tools.
$SAND circulation could grow by injecting liquidity tied to NFT assets, complementing staking’s role in ecosystem stability.
SANDLend addresses these opportunities by introducing a DeFi-inspired lending protocol that leverages Sandbox NFTs, works alongside staking, and drives economic growth. This will deepen user engagement and reinforce $SAND’s prominence in Web3.
Specification
Overview
SANDLend will be a decentralized protocol on Ethereum, integrated with The Sandbox’s infrastructure (e.g., marketplace, wallet, staking system). It features:
Savings Pool: Users deposit $SAND to provide liquidity and earn interest, distinct from but complementary to staking.
Loan System: Users lock Sandbox NFTs as collateral to borrow $SAND, repayable with interest.
Technical Details
Smart Contracts:
Savings Contract: Manages $SAND deposits, calculates interest based on loan demand, and distributes profits. Designed to coexist with the existing staking contracts, offering an alternative yield option.
Oracle Integration: Uses Chainlink or a Sandbox-specific oracle for NFT valuation (e.g., LAND floor prices).
Key Parameters:
Loan-to-Value (LTV) Ratio: Initial LTV at 50% (e.g., a 1 ETH LAND allows borrowing 1,770 $SAND at $0.2829/SAND, assuming 1 ETH = $2,500).
Interest Rates: Variable, based on supply/demand (e.g., 5% APR for savers, 8% APR for borrowers), set to complement staking rewards (currently ~5–10% APR, depending on pool).
Collateral Types: Initially limited to Sandbox LAND and ASSETS; expandable via DAO vote.
Complementary Design: SANDLend savings will offer a distinct pool from staking, targeting users seeking flexible liquidity over staking’s lock-up periods. Users can choose between staking (for ecosystem support) and SANDLend savings (for lending liquidity).
Optional Synergy: Explore allowing staked $SAND to be optionally allocated to SANDLend’s liquidity pool, earning combined rewards (pending technical feasibility and DAO approval).
Marketplace Link: Loans integrate with The Sandbox marketplace for NFT collateral deposits and liquidation auctions.
Governance
Managed by The Sandbox DAO, with adjustable parameters (LTV, rates, collateral types).
2% of interest revenue allocated to the Foundation, enhancing staking and ecosystem funding.
Rationale
Benefits to The Sandbox Ecosystem
Increased $SAND Circulation:
Loans inject liquid $SAND into the economy, boosting marketplace activity (e.g., 1,000 loans of 5,000 $SAND = 5M $SAND, ~$1.41M).
Complements staking by mobilizing unstaked $SAND for active use.
Reads a lot like NFTfi and Blur Lending. You’re right, there’s a lot of SandFam assets that could create a lot of economic activity within our ecosystem…I hadn’t even thought of that.
I struggle a bit to understand the problem statement of your proposal.
I undesrtand that is a biot like a pawn shop where you propose your NFT iin exchange of some liquidity. Is this summary correct?
If that is the case, you would need a serious expert in the NFTS to be able to provide a valuation to an NFT assets. Maybe it culd be an idea to ask to @Arthemort and the The Sandbox DAO NFT Collection Management proposal to manage that valuation.
That’s accurate. To address this, I recommended initiating with Sandbox LAND, and then using DAO community SIP voting to expand collateral to other blue-chip NFTs.
Great idea Hishmad. I believe having such a facility will bring in more vibrancy into The Sandbox.
My only concerns are mainly with liquidity:
LAND value is currently at 0.07eth ($133USD based on $1900usd/eth). At a LTV of 50%, that’s 65USD. It’ll take 10 LANDs to get close to 650USD in loans.
Average total sales for the past 7 days are about 2 ETH. Are we looking at having an external counterparty for loans in case of default?
Thank you @DAO for taking the time to discuss my proposal.
Using $SAND instead of ETH solves the liquidity crunch while pushing $SAND circulation—the key goal. With LAND at 532 $SAND and weekly sales at 15,200 $SAND, liquidating 10 LANDs (5,320 $SAND) is manageable with the following tweaks. Staggered sales, pooled funds, and $SAND-only mechanics ensure the system works without ETH, making $SAND the lifeblood of LAND loans. Doable and aligned with the vision.
Implement a $SAND Liquidity Pool
Solution: Set up a decentralized liquidity pool funded entirely in $SAND to cover defaults.
How it works: Users deposit $SAND into a smart contract pool. If a borrower defaults, the pool buys the LAND at its $SAND value (e.g., 532 $SAND per LAND) and resells it slowly.
Example: For a 266 $SAND loan (10 LANDs at 50% LTV = 5,320 $SAND total value, loan = 2,660 $SAND), the pool pays 2,660 $SAND to the lender, then sells 10 LANDs at 2,000–3,000 $SAND per week (matching the 15,200 $SAND sales volume).
Feasibility: DeFi pools (e.g., Uniswap) support ERC-20 tokens like $SAND. Sandbox community members or $SAND holders could fund it, earning fees in $SAND.
Benefit: Keeps $SAND flowing while ensuring lenders are repaid instantly.
Partner with a $SAND-Based Market Maker
Solution: Hire a market maker to buy LAND in $SAND during defaults, increasing $SAND usage.
How it works: The market maker agrees to purchase LAND at a discount (e.g., 456 $SAND vs. 532 $SAND) in $SAND, then resells it strategically.
Example: For 10 LANDs, they pay 4,560 $SAND (covering the 2,660 $SAND loan plus profit), using $SAND exclusively.
Feasibility: Crypto market makers can operate with $SAND if incentivized (e.g., via Sandbox partnerships). Smart contracts enforce $SAND payments.
Benefit: Offloads risk and circulates $SAND through professional trading.
Staggered Liquidation in $SAND
Solution: Code smart contracts to sell LAND in $SAND over time, matching market capacity.
How it works: On default of a 2,660 $SAND loan (10 LANDs), the contract auctions 2–3 LANDs weekly (1,064–1,596 $SAND) until 2,660 $SAND is recovered, aligning with 15,200 $SAND weekly sales.
Example: Week 1: Sell 3 LANDs for 1,596 $SAND; Week 2: Sell 3 more, etc.
Feasibility: Smart contracts can handle $SAND transactions with time delays and price floors (e.g., min 400 $SAND per LAND).
Benefit: Prevents market floods, all in $SAND, boosting its circulation.
Offer $SAND Loan Insurance
Solution: Create an insurance fund where borrowers pay $SAND premiums to protect lenders.
How it works: Borrowers pay 1% of the loan in $SAND (e.g., 26.6 $SAND for a 2,660 $SAND loan) into a fund. If LAND sales fall short, the fund pays lenders in $SAND.
Very cool idea. In my opinion it is too early to do something like this, because nobody really has any use or need for sandbox assets at this stage in development.
That said, once Sandbox does take off this would be a very cool addition to our ecosystem. Obviously up to you on when you launch, but if I were you I would focus on a specific use case that you are excited about using these loans for, whether it’s in the Sandbox or some other NFT platform.
Separately a few questions:
When you say “earn interest” in the Savings Pool do you mean trading fees? My understanding is that you can put it in something like AAVE and only earn interest, or uniswap and provide liquidity (and earn trading fees). Which of these two models would it be?
Are you asking for funding for this project or just announcing it?
If you launched today, why do you think someone would give a loan to someone for a sandbox item?
I had to admit that I was so far against land lending because I thought that there was no market or that it will bring down significantly the land price. But seeing the last 3 months the land price crashing and nothing really in the roadmap to boost the interest for lands why not trying. I will be now, willing to support the initiative.
This could be done via the DAO, perhaps in a centralized way.
The concept is that the DAO would act as a real estate agency where you can propose your NFTs, and the DAO would lend them on your behalf. This would have several benefits:
The DAO can control the rental price, preventing competition among lenders from driving prices too low.
By maintaining a stable rental price, the DAO could charge fees on rentals and generate revenue.
Users would feel more secure if a centralized, recognized organization like the DAO managed the process, rather than being vulnerable to scammers trying to take advantage of others.
The service could also include assets or even NFTs, as proposed by @hishmad.
You could even consider this service an extension of what @Arthemort is trying to achieve with the DAO collection—lending NFTs to generate revenue. (Why not extend this to TSB NFTs?). Understanding that this would require more effort and not necessarily art expertise, it could still be a valuable addition to the DAO’s offerings.
To me, the purpose of land rentals is not only to increase land price, it’s to make creating and operating a game on Sandbox as cheap as possible. IMO the main barrier to making a game today is that everything costs money. You have to buy land, catalysts, assets, etc. to make a game. The more we can do to reduce that while keeping the value of the assets in tact, the better.
It was almost profitable when catalysts were handed out upon request. But now that they have to be bought, there’s no revenue mechanic that can balance that cost + land price + developing an experience + creating assets
