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# Technical Details - Leverage Buy of NFT

One of the main bars to entry for retail users into the NFT market is the high price of NFT items, especially blue-chip NFTs such as CryptoPunk, BAYC etc. A great way to lower such a bar is through leverage buy.
Leverage buy on an NFT is similar to mortgage on a house. The current credit (i.e. the available amount of borrowing that is enabled by existing collateral) will be considered in conjunction with the additional credit that the leverage buy targets would bring, such that even though the total borrow amount should not exceed the current credit plus the extra borrow credit from collateralizing the leverage bought NFTs. This result in the calculation of credit limit as following:
$CR_{\max}=CR+\sum_{i=1}^{n}\left(Floor\_Price_i*CF_i\right)$
where
$CR$
denotes the current credit,
$Floor\_Price_i$
and
$CF_i$
denote the floor price and collateral factor of the
$i$
Note, any single transaction of NFT could result in a change in the floor price of the collection and by extension every item of NFT within. Therefore, technically
$CR_{\max}$
calculation should consider the foreseeable influence of each leverage buy transaction on the floor price. However, as leverage buy can only result in an increase in floor price (i.e. the floor priced item is bought thus the new floor price becomes the previously the second lowest “buy now” price) without any possibility of lowering the floor price, the calculation of credit limit defined in eq. (1) is a conservative measure.
The leverage buy transaction will be facilitated through flashloan. Specifically:
1. 1.
User defines the items of NFT he intends to purchase through leverage buy. Note the items have to be listed with “Buy Now” prices which will be the transaction prices through the leverage buy function;
2. 2.
The borrowing amount (value “
$B$
”) will be calculated per the user-defined list of NFTs to be acquired through leverage buy. Note the amount will not be allowed to be borrowed if it exceeds
$CR_{\max}$
.
3. 3.
A flashloan of ERC20 tokens will be originated from Para Space platform, and the borrowed assets are then used to purchase the list of target NFTs at their “Buy-Now” prices.
4. 4.
The acquired list of NFTs will be deposited and collateralized on Para Space platform.
At the end of the leverage buy transaction, the leverage buyer adds the desired list of NFTs to his asset position (i.e. deposit and collateral) and value “
$B$
” to his loan position.
Without mortgage as a product there would not be a housing market. We believe the launch of leverage buy will bring a wave of momentum to the NFT market, and open the door to a list of innovations to the NFT-Fi sector.