Blur users open $95M loans backed by NFTs in 10 days

Upstart NFT marketplace Blur’s lending protocol, Blend, has gotten off to a flying start.

The platform, which allows users to borrow crypto against digital collectibles in perpetuity, has so far seen 51,656 ETH ($95 million) in loans since its launch 10 days ago, a Dune dashboard shows. More than 3,000 individual Blend loans have been opened to date.

Blend’s launch on May 1 helped boost total NFT lending volume to record highs, reaching $67 million during the week. Blend loans accounted for 75% of this figure, outperforming competing platforms such as NFTfi, Arcade, X2Y2 and BendDAO.

On a large scale, the accumulated NFT loan volume in US dollars is more than $1 billion spread over 76,000 loans. There is currently nearly $150 million in outstanding debt, per a separate dashboard.

Blend currently supports loans backed by four NFT collections: anime-inspired Azukis, street-style Miladys, deity-centric DeGods, and wrapped versions of cutting-edge CryptoPunks.

Read more: How does NFT lending actually work? A deep dive

Azuki is by far the most popular security on Blend so far, representing almost half of the 4,194 ETH ($7.7) in active loans.

Those who lend ether against Azuki-backed collateral earn an average of 17% APY, data shows. Wrapped CryptoPunks, which has 952 ETH ($1.7 million) in active loans, stands much higher – averaging 39% annual percentage return for lenders.

The process is as follows:

1. Deposit: As a borrower, you lock your NFT in Blend as security
2. Set Terms: Specify the loan terms, including ETH amount and interest rate
3. Lender Acceptance: Lender accepts your terms and gives ETH
4. ETH transfer: You receive the lender’s ETH; your NFT remains in Blend as collateral
5. Accrued interest: Over time, the lender earns interest on the loan
6. Repayment/liquidation: Pay off the loan to get back NFT. Default or failure to refinance via auction means that the lender collects NFT.

Floor prices for all four supported NFT collections have fluctuated over the past 30 days, with Azuki, DeGods and Miladys falling between 1% and 10%.

Miladys is the farthest, up around 69%, from 2.24 ETH ($4,140) to 3.8 ETH ($7,020), per OpenSea. Ether has fallen around 3% in the same period.

Typically, lenders will be willing to hand out Ether in return for NFTs if they believe the tokens won’t drop massively in value – or the interest rate offered is worth the time.

As it turns out, there seem to be plenty out there eager to take that bet.

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