NFT
Users of the NFT protocol for borrowing and lending Blend has taken out loans totaling nearly a quarter of a billion dollars. And it’s only Blend’s first month. The market has taken note and Binance has moved to NFT lending as well. How concerned should Blend’s competitors be?
Blend, the NFT lending and borrowing protocol developed by Blur in partnership with Paradigm, claims to have had an impressive first month. Since launching on May 1, Blend has made more than 15,800 loans totaling 123,500 ETH ($224.4 million), according to a Nansen report.
A great first month
Blend distinguishes itself from its competitors by its unique properties. It does not charge borrowers and lenders, eliminates the need for oracles, and does not impose loan expiration dates. Borrowers can secure fixed rate ETH loans against their NFTs without worrying about repayment terms or collateral liquidation. Its launch has greatly contributed to the continued financialization of NFTs.
The protocol’s lending and lending functionality will initially include popular NFT collections such as CryptoPunks, Azukis, and Mildays, with plans for expansion. Blend’s approach to fixed-term loans simplifies the protocol by removing oracle dependencies and enabling lenders to measure risk levels through loan-to-value (LTV) ratios and interest rates.
Blend’s elimination of loan due dates sets it apart from other peer-to-peer protocols. The protocol aims to provide more flexibility. Lenders can exit positions at any time through refinance auctions, limiting their risk exposure and promoting an efficient market. Loans on Blend remain active until borrowers activate refinance auctions or pay back the amount owed in full.
Not everyone is sold. But Brent Xu, CEO and co-founder of lending and lending platform Umee, believes Blend is a step forward for the industry. “Lending for NFTs presents new opportunities for on-chain revenue generation that will create new markets for the DeFi ecosystem.”
Blend’s success should worry competitors
“One of the most notable benefits of NFT technology is its potential to bring physical entities such as deeds and bonds on-chain,” explains Xu. “As industry leaders fulfill this promise, we will see a much more diverse range of use cases.”
However, Charles Wayne, co-founder of Galxe, believes competitors should be concerned about Blend’s impressive liquidity and transaction volume.
“Liquidity for blue chip NFT holders is always an issue. The launch of Blend was anticipated and meets the needs of large whales in the Blur market,” he said.
“Of course, the competitive advantages were enhanced by the fact that it is now one of Blur’s largest NFT markets. Adding more liquidity and flexibility to NFT assets has always been a question for the NFT community, especially for whales”
This week, however, exchange giant Binance announced that it was also joining the NFT lending craze.
Currently, the exchange has limited the service to four collections: BAYC, MAYC, Azuki, and Doodles. Initially, the platform will keep the annual interest rate at 3.36% and will later raise it to 11.20%. The loan-to-value ratio is 40% for Doodles, 50% for Azuki and MAYC, and 60% for BAYC collections.