More NFT Holders On Blur Are Taking Loans, Not Trading

Recent on-chain data reveals that Blur, the peer-to-peer, zero-fee 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 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