What Is the Challenge in Determining the Fair Market Value of an NFT?

The primary challenge is the lack of standardized valuation models and low liquidity compared to fungible tokens. NFT value is often subjective, driven by community sentiment, historical sales, and perceived rarity.

This illiquidity and subjectivity make it difficult to establish a reliable, real-time price feed, which is crucial for calculating loan-to-value ratios for collateral.