Recent data on the series reveal Blur, a peer-to-peer non-fungible token (NFT) marketplace and aggregator, is now more popular for facilitating loans than trading.
A report compiled by DappRadar showed that Blur’s NFT loan volumes rose from 4,200 ETH (or roughly $7.6 million) to 169,900 ETH (or $308 million) in less than a month. All loans were processed through a Blur Lending protocol called Blend which was launched on May 1, 2023.
More data reveals that NFT trading volumes have been shrinking as activity has shifted to lending since early May. Trackers show that more NFT holders are creating accounts and taking out loans backed by their assets.
Starting May 1, Blur’s NFT loan trading volumes increased by more than 39 times in 22 days, pushing the protocol’s dominance in the NFT lending sector even higher.
DappRadar reports that more than 80% of all NFT-backed loans are now facilitated through Blend.
Blend is behind Blur’s TVL rise
According to NFT Marketplace, Blend is a peer-to-peer lending protocol created by Blur.
This way, users can borrow loans in ETH at any time using what would otherwise be idle but valuable digital NFTs.
Blend works by matching borrowers with lenders. In this arrangement, borrowers specify the amount of ETH they wish to borrow and the NFT they wish to share as collateral.
The lender sets the interest rate at which they are willing to lend ETH. If the match is made, the deal is concluded and the transfer takes place, without trust.
Blend accepts any NFT listed as collateral and the lender can end up owning the NFT if the borrower fails to repay.
According to DeFiLlama dataBlur Closed (TVL) has a total value of more than $143 million, which is a sharp rise from the $23 million it posted in early January. The near-exponential rise in TVL coincides with the launch of the BLUR token.
This engagement catalysed, pushing the total number of assets under management to more than $100 million. The number continues to rise, rising to more than $147 million, the highest level, on May 24.
CryptoPunks, Milady Maker, and Azuki are some of the popular NFTs
Blur is in the stimulus phase of “Season Two,” aiming to encourage more NFT listings.
The NFT aggregator and marketplace has allocated 300 million BLUR to reward traders who list NFTs on the platform.
Although these incentives have led to increased trading and TVL, DappRadar reports that there have been instances of “laundering trading,” with more than 1,900 wallet addresses identified as participating in the underworld.
As the activity shifts to lending, lenders prefer to lend to owners of CryptoPunks, Milady Maker, and Azuki NFTs. Specifically, borrowers who locked NFTs on Azuki and CryptoPunks got a total of 70,031 ETH and 34,960 ETH, respectively.
Meanwhile, given the a little Milady Maker’s floor price of 3.4 ETH saw 22,510 ETH in loans distributed.
Featured image from Canva, chart from TradingView