More NFT holders on Blur are borrowing, not trading
Recent on-chain data reveals that Blur, the peer-to-peer, zero-fee non-fungible token (NFT) marketplace and aggregator, is now more popular for facilitating loans than trading.
A report compiled by DappRadar showed that Blur’s NFT lending volumes rose from 4,200 ETH (or roughly $7.6 million) to 169,900 ETH (or $308 million) in less than a month. All loans were processed through the Blur Lending protocol called Blend which launched on May 1, 2023.
Additional data reveals that NFT trading volumes have shrunk as activity shifts to lending since early May. Trackers show that more NFT holders are opening accounts and taking loans secured by their assets.
As of May 1, Blur’s NFT loan trading volume soared over 39X in 22 days, pushing the protocol’s dominance in the NFT loan sector even higher.
DappRadar shows that over 80% of all NFT-backed loans are now arranged through Blend.
Blend Is Behind Blur’s Rising TVL
According to the NFT market, Blend is a peer-to-peer lending protocol created by Blur.
In this way, users can borrow in ETH at any time using what would otherwise be idle but valuable digital NFTs.
Blend works by matching borrowers with lenders. In this arrangement, the borrower specifies the amount of ETH they want to borrow and the NFT they want to stake as collateral.
Lenders decide the interest rate they want to borrow ETH for. If a match is made, the deal is sealed and the transfer is made, without trust.
Blend accepts any listed NFT as collateral, and the lender can end up owning the NFT if the borrower defaults.
According to DeFiLlama data, Blur’s total value locked (TVL) is over $143 million, a steep increase from the $23 million recorded in early January. The near-exponential increase in TVL coincides with the launch of the BLUR token.
This encouraged participation, pushing the total number of assets under management to over $100 million. The number continues to climb, rising to over $147 million, the highest level, on May 24.
CryptoPunks, Milady Maker and Azuki are popular NFTs
Blur is in the incentivization phase of its “Season 2”, aiming to encourage more NFT listings.
The NFT aggregator and marketplace has set aside 300 million BLUR to reward traders who list their NFTs on the platform.
Although these incentives have increased trading and TVL, DappRadar reports that there have been “wash trading” cases, with more than 1,900 wallet addresses identified as engaging in the vice.
As activity shifts to lending, lenders prefer to lend to owners of CryptoPunks, Milady Maker, and Azuki NFTs. Specifically, borrowers who have locked their Azuki and CryptoPunks NFTs have received a total of 70,031 ETH and 34,960 ETH respectively.
In the meantime, consider low the Milady Maker floor price of 3.4 ETH has seen 22,510 ETH of loans dispersed.
Feature image from Canva, chart from TradingView
