Huge Increase in NFT Loans on Blend
NFT loans are becoming more and more popular, but in the current market, they can also be very risky.
The NFT lending market has been shaken up by the arrival of Blur Marketplace's new NFT lending platform, Blend. In just 11 days since its launch, Blend has registered over 3,400 NFT-backed loans worth over 100 million USD. The platform has become a dominant player in the market, controlling a staggering 75% market share, overtaking established lending platforms such as BendDAO, NFTfi and Arcade.
Collectors can secure ETH loans backed by one of four participating NFT collections: Azuki, Milady Maker, Wrapped CryptoPunks and DeGods. The platform also allows collectors to purchase new NFTs with just a small initial deposit. However, as the NFT market remains increasingly volatile, these loans could prove to be a risky proposition for all involved.
In its first ten days of operation, Blend received 3,000 loans from 900 different lenders, meaning it borrowed more than 51,000 ETH against many major non-cash assets, according to Dune Analytics. However, given the high volatility of the NFT market, these loans could pose a significant risk.
Example of a warning signal
A cautionary example for those using Blend may be the experience of BendDAO. Last year, as the NFT market began to deteriorate, BendDAO faced a serious situation when floor prices in the Bored Ape Yacht Club (BAYC) collection began to plummet. This decline exceeded the value of the loan, leading to a potential liquidity crisis. Although the price of the BAYC collection stabilized just in time, BendDAO was forced to hastily rewrite its terms to protect itself from another sudden drop in NFT value.
Should the current bear market take a turn for the worse and the floor price face another unexpected drop, those using Blend could be in trouble. Lenders could be stuck with NFTs that do not equal the value of the loan, and those who took out the loan may not be able or willing to repay the borrowed ETH. Given the unpredictable nature of the NFT industry, it is impossible to predict how things will turn out. However, it is important for anyone participating in the NFT market to be prudent and aware of the risks involved.
analyst opinion
Lucie Veselá
The NFT lending market has been shaken up by the arrival of Blur Marketplace's new NFT lending platform, Blend. In just 11 days since its launch, Blend has registered over 3,400 NFT-backed loans worth over 100 million USD. The platform has become a dominant player in the market, controlling a staggering 75% market share, overtaking established lending platforms such as BendDAO, NFTfi and Arcade.
Collectors can secure ETH loans backed by one of four participating NFT collections: Azuki, Milady Maker, Wrapped CryptoPunks and DeGods. The platform also allows collectors to purchase new NFTs with just a small initial deposit. However, as the NFT market remains increasingly volatile, these loans could prove to be a risky proposition for all involved.
In its first ten days of operation, Blend received 3,000 loans from 900 different lenders, meaning it borrowed more than 51,000 ETH against many major non-cash assets, according to Dune Analytics. However, given the high volatility of the NFT market, these loans could pose a significant risk.
Example of a warning signal
A cautionary example for those using Blend may be the experience of BendDAO. Last year, as the NFT market began to deteriorate, BendDAO faced a serious situation when floor prices in the Bored Ape Yacht Club (BAYC) collection began to plummet. This decline exceeded the value of the loan, leading to a potential liquidity crisis. Although the price of the BAYC collection stabilized just in time, BendDAO was forced to hastily rewrite its terms to protect itself from another sudden drop in NFT value.
Should the current bear market take a turn for the worse and the floor price face another unexpected drop, those using Blend could be in trouble. Lenders could be stuck with NFTs that do not equal the value of the loan, and those who took out the loan may not be able or willing to repay the borrowed ETH. Given the unpredictable nature of the NFT industry, it is impossible to predict how things will turn out. However, it is important for anyone participating in the NFT market to be prudent and aware of the risks involved.
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