Blur’s NFT lending platform Blend has secured an 82 percent share of the market’s lending volume. According to DappRadar, Blend amassed a trading volume of approximately $308 million or 169,900 ETH within its first 22 days. In comparison, the combined trading volume across various NFT lending platforms during the same period reached around $375 million.
Blend’s launch witnessed a lending volume of 4,200 ETH, equivalent to approximately $7.6 million. Within less than a month, the platform’s trading volume skyrocketed by 3,945 percent.
Per DappRadar’s data, the trading volumes in the NFT market reached $466 million during the said period, highlighting a changing trend in attitudes, focusing more on NFT lending than ownership. Lending activities now account for 46.2 percent of Blur’s total trading volume.
Currently, the lending platform supports loans secured by four NFT collections — Miladys, Azukis, DeGods and wrapped versions of CryptoPunks. However, Blur recently revealed plans to introduce lending options for Clone X, with additional projects expected to arrive in the coming days.
In line with DappRadar’s data, Delphi Digital’s analytics also confirmed Blur’s rapid success. Shortly after its launch, Blur seized a substantial 53 percent market share, surpassing OpenSea to secure the leading position.
This achievement was attributed to Blur’s native token airdrop in the first quarter of 2023, boosting Ethereum’s NFT trading volumes.
1/ 🚨BLEND ANNOUNCEMENT🚨
Blur Lending (Blend) support will be live shortly for Clone X. pic.twitter.com/oN2HR5hVTL
— Blur (@blur_io) May 25, 2023
Blend’s success potential
Speaking to CoinDesk, DappRadar data analyst Sara Gherghelas claimed that Blend’s success holds excellent potential in revitalizing stagnant NFT markets by attracting capital.
However, Gherghelas also raised concerns regarding the market’s overall maturity and its potential implications on the prices of collections.
Ghergelas commented on the substantial trading volume, saying that the high volumes on Blend could lead to increased price volatility, which could impact the market’s stability and pose challenges for traders in accurately predicting price movements.
1/ 🚨FEATURE ANNOUNCEMENT🚨
You can now borrow ETH and pay back your loan in small increments over time instead of all at once.
This works for NFTs bought with BNPL and NFTs you borrow directly with. pic.twitter.com/GtUzAzDBwp
— Blur (@blur_io) May 24, 2023
DappRadar’s report highlights that Blur’s total value locked has grown from $119 million to $146 million since the launch of Blend. It raises concerns about wash trading practices, revealing that approximately $19 million has been identified as wash traded in the past week alone.
Ghergelas highlighted concerns regarding the reported number and its impact on the credibility of the trading volume on the Blur platform and the wider NFT industry.
She said transparency and preemptive actions against manipulative practices were significant for both platforms and market participants, especially with the goal of encouraging broader adoption of NFTs.
.@blur_io has surpassed OpenSea to become the largest NFT marketplace.
Its airdrop has fueled an incentive flywheel to create real network effects.
Blur has achieved 53% market share within a few months of launch, here's how they did it: 🧵⬇️ pic.twitter.com/GlQiaXpopR
— Delphi Digital (@Delphi_Digital) February 21, 2023
Risk of loan
While Blend has established a notable stronghold in the market, there are inherent risks associated with using NFTs as loan collateral.
Blend allows borrowers to offer NFTs as collateral to secure a loan. Through this process, borrowers determine the loan terms and receive Ethereum from a lender, while their NFTs are held as collateral throughout the loan duration.
As highlighted by NFTnow, the floor prices of the assets can suddenly plummet. For example, in 2022, the prices of Bored Ape Yacht Club NFTs dropped by 80 percent within six weeks. People who had taken loans using their Apes as collateral encountered margin calls, where lenders demanded additional collateral to offset the diminished value of the assets.