Blend Secures Top Spot in NFT Lending With 82% Market Share – Crypto News – Crypto News
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Blend Secures Top Spot in NFT Lending With 82% Market Share Blend Secures Top Spot in NFT Lending With 82% Market Share

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Blend Secures Top Spot in NFT Lending With 82% Market Share – Crypto News

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2 years ago

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Blur quickly gained recognition in the NFT sector, and its lending protocol, Blend, seems to be following suit. Blend’s popularity has skyrocketed. since its launch in Mayeclipsing its competitors and also dramatically increasing the overall volume of NFT loans.

According to data from DappRadar, Blend secured 169,900 ETH ($308 million) in trading volume in just 22 days. The trading volume across all NFT lending platforms? It reached about $375 million, meaning that Blend secured a staggering 82 percent of the lending volume across all NFT lending protocols in less than a month.

What’s more, Blend’s market share is likely to increase as its offering continues to expand. Currently, it supports loans backed by four NFT collections: Miladys, Azuki’s, degodsand wrapped versions of CryptoPunks, However, Blur recently announced it would be launching lending for Clone X, and other projects are expected to be added in the near future.

Blend’s emergence in the NFT lending market follows Blur’s earlier success. According to analytics from Delphi DigitalBlur secured 53% of the NFT marketplace market share just a few months after its launch, quickly surpassing OpenSea to become the market leader, This was largely driven by Blur’s native token airdrop in Q1 2023, which resulted in a significant increase in Ethereum’s NFT trading volumes.

Despite Blend’s impressive market dominance, the practice of using NFTs as collateral for loans is not without its risks,

What to know

Blend is actually two product offerings. One offering allows individuals to use their NFTs as collateral to access ETH liquidity. Borrowers pledge their NFTs as security for a loan, establish the terms of the loan, and are given Ethereum from the lender. The borrower then receives Ethereum from the lender, and the NFT remains as collateral. The other offering is the buy-now-pay-later function, which lets users gain access to expensive blue-chip NFTs for a small down payment.

Many have already experienced the downsides of such practices.

In 2022, Bored Ape Yacht Club (BAYC) NFT prices dropped by 80% in six weeks, Those who had over-leveraged themselves by using their Apes as collateral for loans faced margin calls, a situation where lenders request additional collateral to compensate for the decreased value of the asset. And while purchasing blue-chip NFTs without needing the necessary funds upfront seems like a dream come true, what happens when the value of the NFT decreases but users are locked into previous prices?

But despite the risks, Blur shows no signs of slowing down. The company announced a new feature on May 24 that will allow users to “extend [their] loans by paying down as little as 0.1 ETH instead of repaying the full amount at once.”

Users will be able to borrow ETH and pay back their loan in small increments over time instead of all at once. This strategic move is not only likely to retain existing users but also to continue to attract new participants to the platform. However, while Blend’s rapid ascension in the NFT lending market is undoubtedly impressive, it is important for participants to understand and navigate the inherent risks involved in using NFTs as collateral for loans.

Editor’s note: This article was written by an nft now staff member in collaboration with OpenAI’s GPT-4.

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