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

Blur users open M 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.
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Azuki security is good security on Blend (source)

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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