Blend’s rapid rise in the NFT lending market

A recent blog post by DappRadar reported that Blur’s new platform, Blend, has greatly increased the non-fungible token (NFT) lending market. Blend, a peer-to-peer lending protocol launched by Blur on May 1, 2023, has seen an astounding 3945% growth in its first weeks of operation. The total loan volume increased from 4,200 ETH ($7.6 million) on the first day to 169,900 ETH ($308 million) in just 22 days.

Blend’s rapid growth has allowed it to outperform other centralized platforms by approximately 2.93x in weekly loan volume. Furthermore, Blend now represents 82% of lending volume across all NFT lending protocols.

Total Value Locked (TVL) in Blend has also seen a significant increase, rising from $5.21 million on launch day to $24 million by May 22, marking a 360% growth. This increase in Blend’s TVL has also driven the total TVL of Blur, which rose from $119 million to $146 million, a respectable increase of 22.6%.

Blur’s rise was ignited by the successful completion of Season 1 and subsequent token launch, pushing it past OpenSea in trading volume. Currently, in its Season 2 incentive campaign, Blur has developed a unique strategy to strengthen its position.

Traditional bidding and listing points aside, Blur encourages traders to exclusively list their NFTs on the platform by offering rewards. 300 million BLUR, equivalent to 186 million dollars, has been earmarked for this purpose. This tactic has lured many NFT whales to the platform, resulting in $19 million in registered wash trades on Blur in the past week, executed from 1,494 wallets.

However, the trading volume in the last seven days was $104.35 million, a decrease of 15.93% from the previous week. This shift suggests that Blur is currently primarily used for lending rather than trading. In fact, over the past seven days, nearly half (46.20%) of Blur’s activity stemmed from NFT lending, performed by an average of 306 unique daily users.

Since launch, the trend in daily unique users has been on an upward trajectory. On its first day, Blend registered 218 users, but by May 22, the number had increased to 358, a significant increase of 64%. In fact, these figures represent an average of 60% of users using other lending platforms during the same 7-day period.

Blend has truly made remarkable strides in the NFT lending protocol, leaving an indelible mark in a remarkably short time. The milestones achieved by Blend in just 22 days are incredible, achieving a lending volume that other NFT lending protocols have taken years to reach.

This growth and dominance of Blend is testament to its successful strategy. Before Blend entered the market, at least eight other NFT lending protocols, including NFTfi and BenDAO, vied for prominence. NFTfi, the pioneering NFT lending protocol, was launched back in May 2020 and since then has managed to facilitate a total loan volume of $427 million.

BenDAO, another notable player in NFT lending, also made significant strides. Despite being a relatively new player, BenDAO amassed a total loan volume of $315 million over a span of more than a year.

However, Blend has really disrupted the market. The Blend team has not only significantly impacted NFT trading volume, but has also established a solid foothold in the NFT lending space in a remarkably short period of time, setting an unprecedented standard for the competition.

Blend’s portfolio includes three NFT collections: CryptoPunks, Milady Maker and Azuki. These collections have catalyzed the growth of a vibrant market for digital assets, gaining attention from a diverse range of traders and investors.

The latest incentives for the second season of BLUR airdrops have ignited an interesting trend in the NFT landscape. In particular, many NFT whales have taken a somewhat aggressive approach to farming on the platform. In particular, they have been offloading significant amounts of their NFT holdings onto the market, resulting in a trend of large NFT dumps.

This peculiar pattern unfolded dramatically on May 21st, when a serious number of blue chip NFTs from reputable collections were unloaded on Blur. A staggering 25 CryptoPunks were put up for bid, raising 1,200 ETH, equivalent to around $2.2 million.

The incentive structures at Blur appear to encourage, or at least not discourage, significant selling of blue chip NFTs. This leads to volatile market conditions and potentially inflated trading volumes, driven not necessarily by organic demand, but rather by the pursuit of airdrop rewards. Although such a trend is interesting, it can pose a risk to the stability and health of the NFT market, as it can lead to significant price volatility and possible manipulation.

Featured Image Credit: Photo/Illustration by “Andrey Metelev” via Unsplash