Blur Launches Blend: A New NFT Lending Protocol
Since its launch, Blur has quickly taken over as the preeminent marketplace for NFTs, surpassing Opensea with a slew of features that rivals have been unable to keep up with; and they have recently begun their latest service: the Blend lending protocol for NFTs.
The service is the latest attempt at NFT lending which has struggled to take off as a concept in the past, but the team at Blur seems to think they’ve gotten it right with Blend which is jam-packed with thought-out features to reduce friction when using volatile NFTs as collateral.
What is Blend Protocol?
Blend is a peer-to-peer protocol designed for traders to lend and borrow NFT tokens based on a pre-determined value. This value is used to offset the volatility as NFT prices tend to change quickly, making liquidations a constant risk in the past.
To offset the chance of liquidation, Blend uses a unique Dutch auction feature that allows traders to refinance their NFT collateral. If the Dutch auction fails, then the NFT is liquidated. This concept also helps the protocol avoid the need for oracles as lenders and borrowers set their own terms.
Blend also supports a lack of exceptions for loans and debts to help assist users. Instead of liquidating an NFT at a fixed time, the Blend protocol will automatically roll over positions so long as the lender authorizes it.
How is Blend different from other NFT Lending protocols?
As stated earlier, NFT lending protocols are not a new concept, but they have yet to successfully take off as a viable investment option for NFT collectors. Previous attempts by projects such as BendDAO provided options to borrow on NFTs, but the risk of liquidation was too high for traders wanting to extract value out of lucrative holdings from the BAYC or Moonbirds.
By removing the pooled aspect of NFT lending protocols like BendDAO, Blend believes they are positioned to provide the most effective lending rates possible because deals are made in a peer-to-peer system that allows assets to be set by those involved instead of being determined by a larger community pool of assets.
Is NFT lending worthwhile?
When NFTs first took off in 2021, the idea of NFT lending protocols made sense because the floor price for many collections, like CyberKongz and Doodles, appeared stable despite the constant uproar against NFTs, but over time the market has rapidly declined and many questioned if NFTs had the potential to survive long enough for lending protocols to have any practical purpose when floor prices began lasting less than only a few hours during the summer of 2022.
However, interest in Blend’s services has been positive since the protocol was launched. The team has boasted significant numbers, quickly becoming the number one lending protocol available for NFTs.
Since its launch, the Blend protocol has created over 8,875 Eth ($16 million) in trade volume. So, while the market for new NFTs has slowed down considerably, there is still a large community of collectors that are taking advantage of Blend to earn new gains off of tokens already in their collections.
