The NFT lending market has collapsed to the tune of millions in total value (TVL), falling to levels last seen in 2022. DefiLlama data shows that the sector’s TVL today is approximately $8.3 million, down about 97% from the industry’s all-time high of over $300 million in March 2024.
NFT loans TVL. Source: DefiLlama
Arcade, a Pantera Capital-backed NFT lending startup that secured $15 million in Series A in December 2021, is now showing only about $300,000 in TVL, down more than 98% from its March 2024 peak of $21.5 million.
But even protocols that once seemed more resilient are feeling the pinch. Blur’s credit arm, Blend, which was built in partnership with crypto VC giant Paradigm, now has about $3 million in TVL, down more than 90% from $115 million in early 2024.
Nicolas Lallement, co-founder of NFT Price Floor, an NFT analytics website that tracks more than 1,750 collections, told The Defiant that the March 2024 peak was heavily driven by Blur’s incentives.
“Blend (Blur’s lender) absolutely dominated the market at the time, and its growth was heavily fueled by Blur’s agricultural meta. Once those incentives weakened, Blend’s volumes and outstanding debt fell off a cliff, and the broader industry returned with it. That’s why the chart looks like a spike followed by a crash,” Lallement said.
The market has since transitioned to a “more stable model” led by Gondi, a non-custodial peer-to-peer lending protocol for NFTs, Lallement said. He explained that the type of collateral used has also changed, as Blend loans were largely tied to profile photo NFTs and popular IP collections like Pudgy Penguins, which are highly speculative and sensitive to events.
“To me, that’s a healthy transition. NFT art is behaving more like traditional collectibles markets, and that stability makes for better lending behavior,” Lallement explains.
Commenting on declining TVL under credit protocols, Lallement suggested that outstanding on-chain debt would be the “best lens through which to understand the NFT lending market” at this time because NFT collateral “is so illiquid.”
Outstanding NFT Debt
Data collected by Gondi on Dune shows that despite the liquidity crisis, outstanding debt has fallen more moderately, from about 45% from $150 million in March 2024 to $83 million today, indicating that people are still taking out loans even as total capital in the market has fallen.