A new NFT lending platform raises concerns over liquidity – Cryptopolitan
Blur, a pro-focused NFT marketplace, has launched Blend, a peer-to-peer NFT lending platform sparking concerns over its impact on the broader market.
Blend allows traders to lease out their NFTs to collectors, who can buy blue-chip NFTs with a smaller upfront payment. According to Blur, the platform aims to bring in new buyers and drive liquidity by lowering the fiscal barriers to entry for popular NFT collections.
Since Blend’s launch on May 1, some blue-chip NFT collections have seen short-term increases in floor prices. However, there are concerns that NFT lending platforms such as Blend could create liquidity risks if collection floors or cryptocurrency prices collapse.
Twitter user Carl_m101, founder of NFT collection Sky Scooters, highlights the risk of inexperienced buyers entering the market and borrowing funds to purchase NFTs they couldn’t afford before. There are concerns that Blend may impact the market negatively, as well as the native BLUR token.
Blend’s financing strategies under scrutiny
Though not the first platform to introduce NFT lending, Blend’s financing strategies have been met with skepticism. PirateCode and Cryptobiosis, co-founders of peer-to-peer NFT lending platform BendDAO, express concerns over Blend’s refinancing process and whether it will keep lenders safe.
Jonathan Gabler, co-founder of NFT lending platform NFTFi, acknowledges Blend’s innovative approach to introducing liquidity into the market. However, he warns of the dangers of incentivizing traders to take out loans with loan-to-value (LTV) ratios that may be troublesome for volatile digital assets. Gabler emphasizes the need for healthier loan markets and more borrower-friendly peer-to-peer protocols
