If you’ve ever used marketplaces such as OpenSea, LooksRare or Magic Eden, you’re likely familiar with the process of minting, buying and selling non-fungible tokens (NFT). Similar to other crypto assets, the price of an individual NFT can fluctuate depending on factors including rarity and utility, and keen traders will often monitor market changes to make a smart sale.

Unlike the cryptocurrency market, you can’t always sell NFTs instantly and will need to wait until an interested buyer accepts your set purchase price or makes an agreeable offer before offloading your digital collectible, a process that could take hours, days, weeks or longer. There's no guarantee someone will buy your NFT at all and there's a limited market of people who can afford high-priced NFT collections like Bored Ape Yacht Club.

Fortunately, there are several protocols that can help you liquify your NFTs without having to sell them.

Some decentralized finance (DeFi) protocols let you use your NFT as collateral for a loan, similar to a pawn shop.

The idea is to lock up your NFT in a digital vault in exchange for a loan of a cryptocurrency, like ETH or USDC. When the loan expires, you will need to pay the amount you borrowed, plus some interest. The lender, who provides liquidity, will earn that interest. But if you can’t clear your debt, they’ll get to keep your NFT. Some of these protocols provide loans to users through pools or they help match borrowers and lenders.

The NFT lending market is a fast-growing sector, and there are many options for prospective borrowers including some with instant liquidity options. However, sudden downturns in the cryptocurrency market, smart contract exploits and regulatory crackdowns can increase risks associated with these types of transactions.

Another way to create liquid markets for NFTs is to deposit an NFT into a specialized vault linked to fungible tokens.

NFTx, for example, is a platform that issues NFT vault tokens backed by NFTs. A spokesperson for NFTx described the protocol’s primary function to CoinDesk as “NFT liquidity and yield-earning opportunities, bridging the gap of NFTs and DeFi,” and not one that facilitates lending and borrowing like other protocols.

On NFTx, NFT holders deposit their NFT into a vault, and mint a fungible token (vToken) in return. The token can be sold into another cryptocurrency, at the floor price of the NFT collection, to access liquidity. If and when the user wants to claim an NFT from the vault, they can bring back the token and redeem an NFT from the collection.

On NFTx, users can deposit their NFT into a vault specific to NFT collections – for example, PUNK for CryptoPunks – and mint an ERC-20 token called “vToken” that represents a 1:1 claim on a random NFT from within that collection's vault. vTokens can be pooled in automated market makers (AMM) to create a liquid market for other users to trade, and vault creators can charge fees based on minting and redeeming NFTs from their vaults.

It's important to note that the vToken represents a claim on a random NFT from the specific collection, not the exact one you deposited. In other words, you will be able to get a CryptoPunk back if you deposited into the PUNK vault, but perhaps not the one you deposited. If you want to select a specific CryptoPunk NFT from the vault, you can for an additional 5% fee.

Collectors can also turn NFTs into multiple fungible tokens through fractionalization. This method involves dividing an asset into many smaller assets, making it easier for an investor to expose his portfolio to an expensive asset without having to own it. It also lowers the barrier to entry for some investors who are normally priced out of owning high-value assets.

A fractional NFT could be tied to a singular NFT or a collection of NFTs. To fractionalize an NFT, you need to lock up your NFT in a digital vault through protocols like fractional.art and issue fungible tokens that represent proportional claims over the NFT.

Usually, the owner of the fractionalized NFT will retain control over a majority portion of the issued tokens while selling some tokens for crypto. This method can also cause an NFT’s overall valuation to go up or down, as seen with the doge meme NFT.

Lastly, you can also generate passive income by renting out your NFT.

Multi-chain NFT rental protocol and platform reNFT, for example, allows its users to rent or lend their NFTs to others, and focuses on metaverse assets such as land and game skins.

The owner of the NFT can decide on a rental fee and term duration, and renters pay the total rental fee upfront. The protocol then transfers the asset to an escrow contract that lets the user access it as a time-limited possessor but not an actual owner. When the contract expires, the asset is returned to the owner, who also pockets some rental money.

There are a few ways to take a non-fungible asset and make it fungible for easier liquidity. Your choice will depend on what NFTs you hold, how quickly you are prepared to wait for liquidity and what liquidity conditions you are happy with.