Blur Dominates 82% of the NFT Lending Market

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Blend’s Meteoric Rise: 169,900 ETH ($308 Million) in Loan Volume in Just 22 Days

In the constantly shifting NFT industry, Blur’s new platform, Blend, is capturing attention with its innovative lending protocol. It appears that high-net-worth individuals, often referred to as ‘whales,’ are leveraging this tool extensively, sparking increased interest in these DeFi services embedded within the NFT ecosystem. This analytical piece explores these developments and their implications for the growth and resilience of the NFT ecosystem.

Key Takeaways 

  • At the time of writing, NFT loan volumes have reached an impressive $375 million in May, while NFT trading volume during the same period amounted to $466 million.
  • Blur has an 82% dominance over the NFT lending market, and is responsible for a loan volume of $308 million in the past 22 days.
  • Blur’s activity has shifted from trading to lending, which currently represents 46.2% of recent operations.
  • Azuki has become the preferred NFT collection on Blend with an impressive 70,031 ETH ($127 million) in loan volume.

Table of Contents

  1. The rise of Blend: a new chapter in NFT collateral lending
  2. Unpacking the data behind Blend’s success
  3. Blend’s NFT portfolio: analyzing the performance of key collections
  4. Blur’s second season sparks major NFT ‘Dumps’
  5. Closing

1. The rise of Blend: a new chapter in NFT collateral lending

On 1 May 2023, Blur, the renowned NFT trading platform, expanded its technological prowess by introducing the Blur Lending protocol, referred to as Blend. Blend is a peer-to-peer lending protocol that offers a unique edge to crypto enthusiasts by accepting any form of collateral, including NFTs. 

In its first weeks of operation, Blend witnessed an impressive growth of 3945%, with its total loan volume surging from 4,200 ETH ($7.6 million) from its first day to a total of 169,900 ETH ($308 million) in just 22 days. 

Total loan volume on Blend in ETH

Furthermore, the weekly loan volume of Blend even outperformed other centralized platforms by approximately 2.93 times. Additionally, since its inception, Blend has represented a significant 82% of the borrowing volume across all NFT lending protocols. 

Dominance of NFT lending protocols by borrow volume in May 2023

2. Unpacking the data behind Blend’s success 

The first of May marked a pivotal day for Blur, as Blend launched on its platform, as mention above. In an impressive leap, the Total Value Locked (TVL) reached $5.21 million on the same day. Fast forward to 22 May, and the TVL has surged almost fivefold to $24 million, indicating a 360% growth. This significant increase in Blend’s TVL has also fueled the overall TVL of Blur, which rose from $119 million to $146 million, a respectable increment of 22.6%.

Blur’s rise to prominence was ignited by the successful completion of its Season 1 and subsequent token launch, propelling it past OpenSea in trading volumes. Currently, in its Season 2 incentives campaign, Blur has devised a unique strategy to bolster its position. 

Traditional bidding and listing points aside, Blur is incentivizing traders to exclusively list their NFTs on its platform by offering rewards. A total of 300 million BLUR, equivalent to a $186 million, has been earmarked for this purpose. This tactic has lured numerous NFT whales to the platform, resulting in $19 million in recorded wash trades on Blur over the past week, transacted from 1,494 wallets.

However, the trading volume over the past seven days was $104.35 million, a 15.93% decline from the preceding week. This shift suggests that Blur is currently being primarily used for loans rather than trading. In fact, in the last seven days, nearly half (46.20%) of Blur’s activity originated from NFT loans, transacted by an average of 306 unique daily users.

Blur's activity in May, between loan and trading volume

Since its launch, the trend in daily unique users has been on an upward trajectory. On its first day, Blend registered 218 users, but by 22 May, the number had swelled to 358, a significant 64% increase. In fact, these figures represent an average of 60% of users utilizing other lending platforms over the same 7-day period.

Blend Daily Unique Users

Blend has indeed made remarkable strides in the NFT lending protocol, leaving an indelible mark in a remarkably short span of time. The milestones achieved by Blend in just 22 days are incredible, achieving a loan volume that other NFT lending protocols have taken years to reach.

This growth and dominance by Blend attest to its successful strategy. Before Blend’s entrance into the market, at least eight other NFT lending protocols, including NFTfi and BenDAO, were vying for prominence. NFTfi, the pioneering NFT lending protocol, launched back in May 2020 and since then, managed to facilitate a total loan volume of $427 million.

BenDAO, another notable player in the realm of NFT lending, also made significant strides. Despite being a relatively new entrant, BenDAO amassed a total loan volume of $315 million over a span of more than a year.

But it’s Blend that has truly shaken the market. The Blend team has not only impacted the NFT trading volume substantially but has also established a firm footing in the NFT lending space in a remarkably short period, setting an unprecedented standard for its competition.

3. Blend’s NFT portfolio: analyzing the performance of key collections

Blend made a significant impact in the dapp world upon its launch, introducing support for three NFT collections: CryptoPunks, Milady Maker, and Azuki. These collections have catalyzed the growth of a vibrant digital asset market, garnering attention from a diverse range of traders and investors.

On its inaugural day, Azuki and CryptoPunks spearheaded the loan volume, boasting 1,941 ETH and 1,378 ETH respectively, across 157 and 33 loans. These figures firmly establish both collections within the revered ‘NFT aristocracy collections’, a testament to their high value and limited supply.

On the other hand, Milady Maker, a collection with a lower floor price and wider trader base, garnered the most loans at 387, translating into a loan volume of 888 ETH. 

To date, these three NFT collections have seen considerable success on Blend:

  • Azuki: Amassed an astounding 70,031 ETH in loan volume, stemming from 6,455 loans, becoming the preferred NFT collection on Blend.
azuki NFT collections stats
  • CryptoPunks: Generated 34,960 ETH in loan volume, originating from 953 loans.
  • Milady Maker: Garnered 22,510 ETH in loan volume, through a total of 7,621 loans. The collection also registered $66,417 in wash trading coming from 8 wallets in the past 7 days.
milady maker stats

After the initial launch, Blend continued to expand its NFT portfolio with the introduction of DeGods collection on 8 May. In its first day alone, DeGods amassed 409 ETH in loan volume from 65 loans. Overall, the collection has since accumulated a noteworthy 12,746 ETH in loan volume across 1,690 loans. Interestingly, the highest DeGods sale post its migration to Ethereum took place on Blur for DeGod #7843, fetching a handsome 55 ETH on 23 May.

Recently, Blend further bolstered its NFT offering with the addition of Mutant Ape Yacht Club (MAYC) and Bored Ape Yacht Club (BAYC) on 15 May. These collections demonstrated their immense potential right off the bat, raking in 1,208 ETH and 1,058 ETH respectively in loan volumes on their first day.

Just in the past week, MAYC has clocked up 11,583 ETH in loan volume from 1,676 loans, while BAYC managed to amass 18,067 ETH through just 513 loans. It’s important to highlight that we have identified $208,933 worth of wash trading associated with the BAYC collection, originating from four distinct wallets, in the preceding week.

In conclusion, Blend’s commitment to supporting diverse NFT collections and its continuous effort to add more exciting offerings have set the platform apart in the ever-evolving crypto market. As these collections continue to flourish, traders and investors alike will be eagerly watching to see which collection emerges as the next shining star in the NFT universe.

4. Blur’s second season sparks major NFT ‘Dumps’

As mentioned before, the recent incentives for the second season of BLUR airdrops have ignited an interesting trend in the NFT landscape. Notably, many NFT whales have taken a somewhat aggressive approach to farming on the platform. They’ve been notably offloading significant quantities of their blue chip NFT holdings onto the marketplace, resulting in a trend of major NFT ‘dumps’.

This peculiar pattern unfolded dramatically on 21 May, when a serious number of blue chip NFTs from esteemed collections were unloaded onto Blur. A staggering 25 CryptoPunks were put up for bids, raking in a total of 1,200 ETH, equivalent to around $2.2 million. Yuga Labs’ HV-MTLs were not spared either, with hundreds of them being dumped into Blur bids. An unsuspecting airdrop farmer unintentionally left 500 bids open, providing an opportunity for others to sell their NFTs to him well above the floor price. The fallout saw the farmer accumulating over 130 HV-MTLs at a loss of 0.5 ETH per item.

It didn’t stop there. 150 Milady Maker NFTs valued at $1.4 million, 190 Mutant Ape Yacht Club (MAYC) NFTs amounting to $3.4 million in Blur volume, and 400 Doodles racking up over 800 ETH ($1.45 million) in volume were also dropped onto Blur.  Although the volume was substantial, this incident was not the largest dump this year, but surprisingly, the smallest one.

NT Selloffs or dumps in 2023 by NFT whales

The record for the biggest dump so far this year goes to NFT whale Jeffrey Hwang, colloquially known as Machi Big Brother. In February 2023, within 48 hours, Machi dumped 1,010 tokens amassing 11,680 ETH or about $18.6 million. This included 90 Bored Ape Yacht Club (BAYC) for 5707 ETH, 191 MAYC for 3091 ETH, 112 Azuki for 1644 ETH, and 308 Otherdeed for 582 ETH. Interestingly, Machi immediately repurchased 991 NFTs, leading many to theorize that this could either be a strategic move to book profits while conducting a substantial wash trade to drive significant Blur airdrop profits, or a blatant market manipulation attempt.

Being one of the most significant recipients of the Blur (BLUR) token airdrop from the emergent NFT marketplace Blur, Machi’s actions are not without consequence. Now, it appears that others might be following a similar path.

The incentive structures on Blur seem to encourage, or at least do not discourage, significant sales of blue chip NFTs. This leads to volatile market conditions and potentially inflated trade volumes, driven not necessarily by organic demand but rather by the pursuit of airdrop rewards. Such a trend, while interesting, might pose risks for the stability and health of the NFT market as it could lead to significant price volatility and possible manipulation. Therefore, it will be crucial for platforms like Blur and the broader NFT community to closely monitor these trends and consider creating more balanced incentive structures that encourage sustainable growth and stability for the evolving NFT marketplace.

5. Closing

The data clearly illustrates that Blur has established itself as a dominant and indispensable player in the NFT ecosystem. Its innovative incentive strategies have not only attracted a considerable influx of NFT whales but have also triggered significant shifts in the market dynamics. The pivot from trading to lending, and a remarkable growth in daily unique users are testament to Blur’s growing influence and the impact of its strategic maneuvers.

Meanwhile, the blue-chip NFT collections have experienced a notable offloading event on 21 May, where a large number of esteemed NFTs were unloaded, triggering millions in volume. Despite being the smallest dump of the year, it underscores the immense scale and volatility of incentivized NFT sales. 

The actions of major players such as Blur are reshaping the ecosystem, drawing in larger players and driving increased activity. Meanwhile, the consistent performance of blockchains like ImmutableX and Polygon lends stability to the market. The NFT market, therefore, is demonstrating signs of both growth and stability, pointing to a promising future. The ecosystem has proven its capacity to evolve and adapt, suggesting it’s only getting stronger and more vibrant.

While the road ahead for the NFT market will undoubtedly be characterized by both challenges and opportunities, the current trends suggest a promising future characterized by growth, resilience, and increasing sophistication. The evolution of platforms like Blur and the consistent performance of other blockchains are encouraging indicators of this positive trajectory.

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