Financial services company PayPal (NASDAQ: PYPL) has indicated an interest in dabbling in non-fungible tokens (NFTs) via a new patent filing with the United States Patent and Trademark Office (USPTO).
According to the filing, PayPal is keen on developing an NFT marketplace to support the purchase and sale of digital collectibles. PayPal’s proposed offering will allow users to list digital assets representing images, videos, music, event tickets, deeds of personal property, and art.
The September 21 filing includes detailed descriptions for on-chain and off-chain NFT transactions, relying on third-party service providers to facilitate exchanges.
Per the filing document, checkout and custodial services will be handled by an intermediary, while off-chain transactions will involve the use of an “omnibus wallet” containing details of the addresses of contracting parties.
“Therefore, no transfer is registered on the blockchain and there is no need to broadcast the transaction to the blockchain network or pay the gas fees associated with such an on-chain transaction,” read the patent filing.
Although the filing document failed to mention the nature of the service provided, it made several references to the Ethereum (ETH) network. In pushing the functionalities of NFTs beyond mere collectibles, PayPal’s fling hints at the use of tokenization and the possibility for NFTs on its marketplace to earn royalties from secondary purchases.
The proposed NFT marketplace will support fractionalization, allowing users to own different pieces of one digital collectible. Experts have pointed to fractionalization to improve the liquidity of an asset while lowering the barrier of entry for intending investors.
To address the issue of liquidity, the filing makes provision for a decentralized autonomous organization (DAO) to ensure satisfactory liquidity levels via a dedicated platform.
PayPal has been exploring Web 3 since 2020, going on to allow users to buy, hold, and sell digital currencies. The payment services provider took things up a notch with the launch of PayPal USD (PYUSD).
Low adoption metrics for PYUSD
Since launching its stablecoin, PayPal has failed to record significant traction to reduce the market share of industry leaders like Tether (USDT) (NASDAQ: USDT). Nearly two months after launch, its market capitalization stands at less than $50 million compared to USDT’s $82 billion.
Critics have taken swipes at PayPal, stating that they do not expect any significant innovation from the payments company in the stablecoin space. However, given PayPal’s over 400 million customers, industry players still consider them a force to be reckoned with in the ecosystem.
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