- NFT loan transaction volume reaches a six-month high of $67 million, with Blend capturing 75% of the market share.
- Blend’s introduction correlates with a short-term increase in the floor prices of prominent NFT collections, according to data from OpenSea.
- Critics argue that NFT lending platforms like Blend may create liquidity risks.
According to Dune analytics data, the non-fungible token (NFT) loan market witnessed a significant surge last week, with the transaction volume exceeding $67 million, a new high in the past six months. The recently launched lending protocol, Blend, accounted for nearly 75% of the total loan volume.
Blend, a product of NFT marketplace Blur, was introduced on May 4 and has since garnered significant attention in the industry. It is a unique peer-to-peer perpetual lending protocol that enables borrowers to use their NFTs as collateral without term limits.
Developed by Paradigm in collaboration with Blur, the platform aims to match borrowers holding non-fungible collateral with lenders willing to offer the most competitive rates. Loans facilitated by Blend have fixed rates with no expiry dates and are governed by protocol fees controlled by Blur.
The lending platform distinguishes itself from other protocols by matching each loan individually rather than pooling lenders’ funds. This approach supports long-tail collateral, allowing lenders to participate in the complex on- and off-chain protocols and evaluate risks.
Meanwhile, data from NFT marketplace OpenSea suggests that Blend’s introduction may have contributed to a short-term increase in the floor prices of some blue-chip NFT collections. For instance, since May 1, the floor price of the popular Bored Ape Yacht Club collection rose from 47 ETH (approximately $93,500) to about 50 ETH ($99,400). Similarly, the floor price of the Mutant Ape Yacht Club increased from roughly 10.5 ETH ($20,900) to 11 ETH ($21,900).
Despite its positive impact on the NFT market, critics argue that NFT lending platforms like Blend may create liquidity risks if collectors purchase tokens with funds they don’t possess. The potential for market fluctuations and the collapse of cryptocurrency prices add to these concerns.