Binance NFT Marketplace offers lending on Blue Chip NFTs
Weeks after Blur launched its NFT lending platform, Binance launched its non-fungible tokens (NFT) lending feature, which enables users to borrow Ether (ETH) using blue-chip NFTs as collateral. The launch comes around two years after Binance launched its NFT marketplace.
Binance users can now borrow ETH with NFTs
On Thursday, Binance, the world’s leading crypto exchange, entered the NFT lending market. The company launched a new feature that allows users to borrow cryptocurrencies using popular NFTs, including Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Azuki and Doodles. Currently, users can only borrow Ether (ETH).
According to Binance’s NFT website, the current interest rate on token loans is 7.91% pa, while the loan-to-value ratio is 40% to 60%. Meanwhile, users will not be charged Ethereum gas fees.
Binance first launched its NFT marketplace about two years ago, in June 2021. Earlier in May, the crypto exchange giant announced that it would add support for Ordinals, also called Bitcoin NFTs, due to growing demand.
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Blur and Binance Join the NFT Lending Space Despite the Activity Crisis
The launch of the lending feature comes just weeks after Blur, one of the leading NFT platforms, introduced its lending protocol, Blend. The peer-to-peer (P2P) protocol enables borrowers to make smaller down payments to gain exposure to blue-chip assets. In addition, it allows them to discuss specific terms with the lenders, such as acceptable collateral and the interest rate.
Blend witnessed a total volume of 6,406 ETH in the first 24 hours of launch, with borrowers expressing particular interest in Azuki, Cryptopunks, and Milady NFT collections. Blur likened Blend to buying a house — allowing investors to put down a down payment on an asset and pay off the rest of the debt through mortgages.
The NFT market sees a contraction in 2023 as daily trading volumes decline notably compared to previous peaks, according to a report from Galaxy Digital published earlier this month. It revealed that Blur’s dominance in the NFT space reached an all-time high of 80%.
“The top 1% of Blur traders account for 64% of the platform’s volume,” the report showed, compared to just 20% on OpenSea. Still, NFT activity is still higher than the 1-year low seen in November 2022 amid the broader crypto slump.
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How would Binance’s foray into NFT lending affect overall market activity? Let us know in the comments below.
About the author
Tim Fries is the co-founder of The Tokenist. He has a B. Sc. in mechanical engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate in the investment team at RW Baird’s US Private Equity division and is also a co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
