Recently, Blur launched a lending protocol called "Blend", and this small move will drive the entire NFT market.

1. Basic Introduction to Blend

Blend is a "peer-to-peer" NFT lending solution that currently supports three types of NFT collectibles, namely Punks, Azuki, and Milady. NFTfi has always been very playable, and all kinds of people can benefit from it👇

  1. Small picture collectors: Get ETH liquidity without selling NFTs;

  2. Bargain hunters: Buy blue chip NFTs at extremely low costs;

  3. Players who want to get airdrops: In addition to listing and bidding, lending can also get airdrops;

2. Applicable people: small picture collectors

If you are a collector of Punks/Azuki/Milady, you can deposit NFT into Blend and borrow ETH. The official example shows that if you have a Punks, you can easily borrow 42 ETH.

  • In theory, the platform allows a lending rate as close to 100% as possible, and the official recommendation is 95%;

  • In fact, the core of the platform is "peer-to-peer", depending on how much money others are willing to lend;

I have sorted out the current market situation. The lending limits of the three types of NFTs are as follows👇

  • Punks: 94% (floor price 56.1E, 52.5E available for borrowing)

  • Azuki: 93% (floor price 16.7E, loanable 15.5E)

  • Milady: 97% (floor price 3.59E, 3.5E available for borrowing)

It is worth mentioning that the current leading NFT lending platforms, BendDao and ParaSpace, have a maximum upper limit of about 60%, and their capital efficiency is much lower than Blend.

Blend adopts a peer-to-peer model, and the bad debt risk is completely transferred to the user. The platform does not need to bear the risk, so the lending limit is extremely high.

3. Applicable people: traders who want to buy at the bottom

Blend has launched the Buy Now Pay Later service. Users do not need to pay the full amount for blue chip NFTs. Instead, they can use the "down payment + installment payment" method. When the blue chip NFT you purchased rises in value, you can sell it directly on Blur and earn a profit from the increase.

For example, to purchase an Azuki with a floor price of 16.79E now, you only need to pay a "down payment" of 2.38E, and the remaining amount is paid at an annual interest rate of about 10%.

You only need 2.38E to buy Azuki

If you are willing to pay a larger "down payment", you can also have cheaper or even zero interest loans! Because a large number of users participate in the $BLUR airdrop plan and are willing to earn more airdrop points at the cost of zero interest.

4. Applicable people: players who want to take advantage of airdrops

Blur is currently conducting the second airdrop of its tokens. The more points users accumulate, the more $BLUR tokens they will receive in the future.

Originally, players who took advantage of airdrops could only earn points through Listing and Bid, but now the airdrop rules have changed. The Listing rewards for the three types of NFTs have been cancelled, and the Lending score rewards have been increased (see picture). It can be seen that the government encourages users to actively provide funds for the NFT lending market.

New airdrop algorithm

Users on Blur can use the same amount of money to place Bid and Lending orders, bid to buy a certain NFT, or place orders in the lending pool. When a Bid or Lending transaction is completed, the other order will be cancelled. This setting allows users to "have their cake and eat it too", thereby maximizing the liquidity of the Bid and Lending markets.

According to the data panel created by Twitter user 1kbeetlejuice, the average lending interest rate on Blend is currently very high👇

  1. Punks：71%

  2. Azuki：125%

  3. Milady：82%

https://dune.com/beetle/blur-loans

The main reason why the average interest rate is so high is that some users borrow money at super high interest rates, such as 1000%/2000% annual interest rate. My personal guess is that the main reasons are as follows:

  • The Blend interface displays daily interest rates, which many users mistakenly perceive as annual interest rates, leading to incorrect transactions.

3.05% is a daily interest rate, not an annual interest rate

The market is not yet familiar with Blend’s gameplay. Perhaps lending ETH at high interest rates can generate good profits?

5. Liquidation Mechanism

Lenders can freely cancel loans and ask borrowers for interest and principal. Borrowers need to "repay" or "refinance" within 30 hours, otherwise the mortgaged blue chip NFT will belong to the lender. When the lender makes a request to claim back the funds, the next 30 hours will be divided into two stages👇

  1. First 6 hours: The system will automatically search for new lenders with similar conditions for the borrower, such as similar amount/interest rate.

  2. Last 24 hours: If the system cannot automatically match, the user has 24 hours to "repay the debt" or "refinance"

For example, when you borrow 10E with Azuki, and the floor price drops to 10.5E; If within 6 hours, the market cannot find a second person willing to lend you 10E. In the next 24 hours, you can repay 1E and borrow 9E from the market. If the borrower does not handle it in time within 30 hours, the NFT collateral will be returned to the lender.

⚠️Remember to turn on email reminders, otherwise the NFT will be transferred to others at a low price.

Blend provides huge liquidity to the market. Through the BNPL solution, users can use small funds to purchase blue chip NFTs. It is expected that the floor price of some NFTs will be raised in the short term. Currently, the floor price of Punks/Azuki/Milady has been reflected👇

The floor prices of all three types of NFTs have increased

I personally look forward to two types of developments in the future👇

  1. Which NFTs will Blend launch in the future? Can more collectibles break the downward trend?

  2. How will the old NFTfi products fight back to counter Blur's cross-border challenge?