Analysis of the NFT lending market: Can the market driven by Blend be sustainable?
NFT lending market analysis: Is Blend's market sustainable?
The NFT lending market has recently skyrocketed to historic highs since the peak of the 2022 bull market. In just the second quarter of 2023, NFT lending exceeded $197 million, largely driven by Blur’s new lending platform, Blend, launched in early May of this year. Gabe Blockingrker, a researcher at cryptocurrency firm Galaxy Digital, briefly outlined the NFT lending ecosystem and analyzed the current market challenges using Blend as an example. This article was compiled by Chain Catcher.
– In Q2 2023, the weekly lending volume of NFT reached a historical high of $197 million.
– The total lending volume of NFT has increased by 270% since the beginning of the year.
– The total number of users in the NFT lending market is increasing.
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– Blend has captured about 95% of NFT lending volume.
– The total amount borrowed by Blend is approximately $921 million, with around 62,000 loans.
– The top ten lending institutions account for 48% of Blend’s total lending volume.
– The top ten borrowers account for 26% of Blend’s total lending volume.
– 68% of Blend’s lending is driven by airdrop farmers.
One key trend indicates that the current lending volume is organic and may be unsustainable. For Blend, over 68% of approved loans have an annual interest rate of 0%, indicating that users are more concerned with airdrops. This surge in activity will benefit Blur in the short term, but user stickiness and trading volume may decline when these lending incentives stop. Therefore, Blend will face user retention challenges similar to other NFT lending platforms without token incentives.
Blend’s direct impact on the NFT ecosystem will positively influence NFT collectors by educating new users on airdrop dynamics. Additionally, providing competitive lending products to mature NFT collectors can promote new trading strategies around liquid NFT collections. However, in a bear market, NFT lending will struggle to find sustainable product markets as key metrics such as accumulated trading volume and number of traders are at historical lows. In the short term, NFT lending products will also fail to meet the demands of retail collectors.