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 the Blur Lending protocol called Blend that was launched on May 1, 2023.
Further data reveals that NFT trading volumes have been shrinking as activity shifts to lending since early May. Trackers show that more NFT holders are creating accounts and taking loans backed with their assets.
From May 1, Blur’s NFT loan trading volumes rose over 39X in 22 days, pushing the protocol’s dominance in the NFT Loaning sector even higher.
DappRadar shows that over 80% of all NFT-backed loans are now facilitated through Blend.
Blend Is Behind Blur’s Rising TVL
According to the NFT marketplace, Blend is a peer-to-peer lending protocol created by Blur.
In 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, the borrower specifies the amount of ETH they wish to borrow and the NFT they want to stake as collateral.
The lender determines the interest rate they wish to loan their ETH for. If a match is struck, the deal is sealed and the transfer is effected, trustlessly.
Blend accepts any listed NFT as collateral and the lender can end up owning the NFT if the borrower fails to pay up.
According to DeFiLlama data, Blur’s total value locked (TVL) stands at over $143 million, a steep rise from the $23 million registered in early January. The near-exponential rise in TVL coincides with the launch of the BLUR token.
This incentivized participation, forcing the total number of assets under management to over $100 million. The figure continues to rise, rising to over $147 million, the highest level, on May 24.
CryptoPunks, Milady Maker, And Azuki Are Popular NFTs
Blur is in the incentivization phase of its “Season 2,” aiming to encourage more NFT listing.
The NFT aggregator and marketplace has set aside 300 million BLUR to reward traders who list their NFTs on the platform.
Although these incentives have increased trading and TVL, DappRadar reports that there have been “wash trading” cases, with more than 1,900 wallet addresses identified as engaging in the vice.
While activity shifts to lending, lenders prefer to loan to owners of CryptoPunks, Milady Maker, and Azuki NFTs. Specifically, borrowers who locked their Azuki and CryptoPunks NFTs have received a total of 70,031 ETH and 34,960 ETH, respectively.
Meanwhile, considering the low floor price of Milady Maker of 3.4 ETH has seen 22,510 ETH of loans dispersed.
Feature Image From Canva, Chart From TradingView