Mix almost a quarter of a billion in NFT loans in the first month

Users of NFT’s loan and lending protocol Blend has taken out loans totaling almost a quarter of a billion dollars. And that’s just Blend’s first month. The market has rallied and Binance has also moved into NFT lending. How concerned should Blend’s competitors be?

Blend, the NFT borrowing and lending protocol developed by Blur in partnership with Paradigm, claims to have had an impressive first month. Since its launch on May 1, Blend has facilitated over 15,800 loans totaling 123,500 ETH ($224.4 million), according to a report from Nansen.

A bumper first month

Blend stands out from its competitors with its unique properties. It charges no fees to borrowers and lenders, eliminates the need for oracles, and imposes no expiration on loans. Borrowers can secure fixed-rate ETH loans against their NFTs without worrying about repayment deadlines or collateral liquidation. The launch has been a major contributor to the ongoing financing of NFTs.

The protocol’s lending and borrowing functionality initially covers popular NFT collections such as CryptoPunks, Azukis and Mildays, with plans for expansion. Blend’s approach to fixed lending simplifies the protocol by removing oracle dependencies and allows lenders to measure risk levels through loan-to-value (LTV) ratios and interest rates.

Blend’s elimination of loan expirations sets it apart from other peer-to-peer protocols. The protocol aims to offer increased flexibility. Lenders can exit positions at any time through refinancing auctions, mitigating their risk exposure and promoting an efficient market. Loans on Blend remain active until borrowers trigger refinancing auctions or repay the full amount.

Not all are sold. But Brent Xu, CEO and co-founder of the loan and lending platform Umee, believes Blend is a step forward for the industry. “Lending for NFTs provides new opportunities for on-chain return generation that will create new markets for the DeFi ecosystem.”

Blend’s success should worry competitors

“One of the most prominent advantages of NFT technology is the potential to bring physical entities such as deeds and bonds on-chain,” Xu explained. “When industry leaders deliver on this promise, we will see a much more diverse range of use cases.”

However, Charles Wayne, co-founder of Galxe, believes that competitors should worry about Blend’s impressive liquidity and transaction volume.

“Liquidity for blue chip NFT holders is always an issue. The launch of Blend was expected and meets the needs of large whales in the Blur market,” he said.

“Of course, the competitive advantages were enhanced by the fact that it is for Blur, one of the largest NFT markets now. Adding more liquidity and flexibility to NFT assets has always been a requirement of the NFT community, especially for whales.

However, exchange giant Binance announced this week that it was also joining the NFT lending craze.

Currently, the exchange has limited the service to four collections: BAYC, MAYC, Azuki and Doodles. Initially, the platform keeps the annual interest rate at 3.36% and will later increase it to 11.20%. The loan-to-value ratio is 40% for Doodles, 50% for Azuki and MAYC, and 60% for BAYC collections.