Blend secures the top spot in NFT lending with 82% market share

Blend secures the top spot in NFT lending with 82% market share

Blur quickly gained recognition in the NFT sector, and the lending protocol, Blend, looks set to follow suit. Blend’s popularity has skyrocketed since its launch in May, eclipsing the competition and also dramatically increasing the total volume of NFT loans.

According to data from DappRadar, Blend secured 169,900 ETH ($308 million) in trading volume in just 22 days. The trading volume across all NFT lending platforms? It reached around $375 million, meaning Blend secured a staggering 82 percent of the lending volume across all NFT lending protocols in less than a month.

Moreover, Blend’s market share is likely to increase as the offering continues to expand. It currently supports loans backed by four NFT collections: Miladys, Azukis, DeGods and wrapped versions of CryptoPunks. However, Blur recently announced that it would be launching loans for Clone X, and other projects are expected to be added in the near future.

Blend’s emergence in the NFT lending market follows Blur’s previous success. According to analyzes from Delphi Digital, Blur secured 53% of the NFT market share just a few months after launch, quickly surpassing OpenSea to become the market leader. This was largely driven by Blur’s native token airdrop in Q1 2023, which resulted in a significant increase in Ethereum’s NFT trading volume.

Despite Blend’s impressive market dominance, the practice of using NFTs as collateral for loans is not without risk.

What you should know

With Blend, borrowers pledge their NFTs as collateral for a loan, establish the terms of the loan, and receive Ethereum from the lender. The borrower then receives Ethereum from the lender, and the NFT remains as collateral.

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Many have already experienced the disadvantages of such practices.

In 2022, Bored Ape Yacht Club (BAYC) NFT prices fell 80% in six weeks. Those who had over-leveraged themselves by using their Monkeys as collateral for loans faced margin calls, a situation where lenders ask for additional collateral to compensate for the reduced value of the asset.

But despite the risk, Blur shows no signs of slowing down. The company announced a new feature on May 24 that will allow users to “extend [their] loan by paying down as little as 0.1 ETH instead of paying back the entire amount at once.”

Users will be able to borrow ETH and repay the loan in small increments over time instead of all at once. This strategic move is likely to not only retain existing users but also continue to attract new entrants to the platform. However, while Blend’s rapid rise in the NFT lending market is undoubtedly impressive, it is important for participants to understand and navigate the inherent risks of using NFTs as collateral for loans.

Editor’s note: This article was written by an nft employee in collaboration with OpenAI’s GPT-4.

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