Blur NFT marketplace sees great interest in compounding

In the 11 days since its launch it has Blurred NFT Marketplace‘ new lending platform, Blend, has sent shockwaves through the NFT industry. So far, we have registered over 3,400 NFT-backed loans worth more than 55,000 ETH ($100 million).

Through the Blend platform, collectors can secure ETH loans backed by one of 4 participating NFT collections, Azuki, Milady Maker, Wrapped CryptoPunks and DeGods. While allowing them to purchase new NFTs with little more than an initial down payment.

Since its launch, Blend has become the largest lending platform in the NFT space, with approximately 75% of the market share. As a result, it eclipses existing long-standing NFT lending platforms such as BendDAO, NFTfi and Arcade.

According to data from Dune Analytics, in its first 10 days of operations, Blend recorded 3,000 loans from 900 unique lenders. A figure that saw over 51k ETH borrowed against a number of high-profile non-fungible assets. However, as the NFT market remains increasingly volatile, these loans can prove risky for all involved.

BendDAO offers a cautionary tale in the NFT lending market

Last year, when the NFT market started to sour, the other NFT lending platform BendDAO faced a difficult situation when the BAYC floor prices started to plunge. Essentially, seeing the floor price fall outpace the value of the loan, resulting in a potential liquidity crisis. At that point, the BAYC floor just stabilized in a short time, but BendDAO was forced to quickly rewrite the terms to protect against further sudden decreases in NFT value.

Similarly, should the current bear market take a turn for the worse, and floor prices face another unexpected drop, those using Blend could find themselves in a tight spot. Essentially seeing lenders stuck with NFTs that don’t match the value of the loan, and borrowers that can’t or won’t pay back the borrowed ETH. However, due to the unpredictable nature of the NFT industry, the opposite can also be true!

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*All investment/financial opinions expressed by NFT Plazas are from personal research and experience of our site moderators and are intended as educational material only. Individuals are required to research all products before making any type of investment.