Lenders Put More Money at Risk with Milady Maker Compared to Azuki

Blend Azuki Milady
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Exploring NFT lending, unraveling the intriguing contrasts between Milday and Azuki collections

Despite Azuki’s more versatile utilities, lenders exhibit a more aggressive lending preference towards Milady holders. Through a data-driven analysis, we explore the underlying factors behind this phenomenon, providing valuable insights into lending dynamics within the current NFT space. 

Collateralized lending is crucial in traditional finance to enhance asset versatility and drive productivity. Similarly, in NFT lending, there is a need for reliable collateral and lending mechanisms through careful asset assessment. Innovation in this space is eagerly awaited, while accurate data remains paramount.

Key Takeaways

  • Blur’s shift towards lending activities has caused a significant decline in NFT trading volume, with May recording a 44% decrease to $675 million 
  • Azuki and Milady, with 543 and 421 loans outstanding respectively, emerge as the top loan collaterals. 
  • Lenders display contrasting risk appetites towards the two collections, as evidenced by their Loan-to-Value (LTV) ratios.

Table of Contents

  1. NFT market shift: less trading and more lending
  2. Azuki vs. Milady: examining loan patterns 
  3. A closer look at lenders’ risk appetite
  4. Closing words
  5. Continue learning with DappRadar

1. NFT market shift: less trading and more lending

The non-fungible token (NFT) market has experienced a significant shift in recent months, with notable changes in trading and lending activities. According to DappRadar’s latest industry report, May witnessed a 44% decline in NFT trading volume, amounting to $675 million compared to the previous month. This downward trend has been influenced by a prominent player in the NFT ecosystem, Blur.

NFT ranking

Blur’s increased focus on lending activities has significantly impacted the overall NFT trading volume, as users are now incentivized to participate in lending rather than trading.

Among all qualified NFT collaterals, two collections stand out in terms of loan activity: Azuki and Milady. 

Despite their shared popularity as loan collateral, the two exhibit intriguing differences across various metrics. Today’s report delves into the analysis of these numbers, offering valuable insights into assessing NFT value, understanding NFT holders’ behaviors, and more.

2. Azuki vs. Milady: examining loan patterns 

Dune Analytics’ lending statistics highlight Azuki as the leading collection with 543 loans, followed by Milady with 421 loans. 

Dune Blend stats
Source: Dune

Interestingly, despite the inherent default risk associated with lending, lenders on the Blur seem not overly concerned about borrowers defaulting and leaving them with Azuki or Milady NFTs as collateral.

In other words, lenders highly trust the perceived value, market reputation, and liquidity of these NFT collections. 

Azuki and Milady are highly popular NFT collections. They both rank high on DappRadar NFT Ranking in terms of their 30-day trading volume. 

NFT ranking

But these two collections differ regarding their utilities. Azuki has successfully built a strong brand presence and offers unique ‘phygital’ goods, media content, and more, which contributes to its widespread appeal. In contrast, Milady is primarily limited to being an avatar without extensive additional features or functionalities.

We recommend you read the following articles to fully understand these two collections:

Through a closer examination of the lending patterns, an interesting trend emerges: lenders are seemingly more inclined to take on greater risks when it comes to Milady NFTs. This begs the question: what factors or qualities make Milady NFTs alluring to lenders, despite their comparatively limited utilities?

A closer look at lenders’ risk appetite

Azuki’s loan amount stands at 24,181 ETH, while Milady’s is 6,802 ETH. This aligns with expectations, as Azuki’s higher floor price would naturally result in larger loan amounts compared to Milady.

However, the strange aspect is the Loan-to-Value (LTV) figures. The LTV ratio is a measure used in lending to determine the amount of a loan relative to the value of the collateral provided. In the context of NFT lending, it represents the percentage of the NFT’s value that can be borrowed as a loan.

In the case of Azuki, with an LTV of 97%, borrowers can secure loans up to 97% of the value of their Azuki NFT. On the other hand, Milady exhibits LTV figures exceeding 100%, implying that loans taken against Milady NFTs are under-collateralized. 

In simpler terms, lenders are willing to provide loans that exceed the actual value of the Milady NFT. 

This could be unusual, considering Milady’s limited utilities. However, if Milady has exceptional liquidity and sells quickly in the marketplace, it could explain lenders’ willingness to accept loans with LTVs above 100%. 

So let’s turn to DappRadar’s data and examine Milady’s liquidity and trading patterns.

Milady as collateral

Over the past 7 days, Milady NFT trading has experienced a significant decline in various key metrics. 

Milady Maker

The trading volume plummeted by 82.15%, reaching $2.68 million. The number of traders also decreased by 59.25%, with only 218 individuals actively participating in Milady NFT trading. Additionally, the number of sales declined by 82.38%, reaching a total of 413 transactions. 

These figures suggest a waning interest among traders in the Milady NFT market, reflecting a decrease in market demand.

The decreasing liquidity and the presence of LTV rates over 100% suggest a possible explanation: lenders and borrowers could be the same individuals. In other words, people might be borrowing money against their own NFTs. 

In fact, the self-lending practice on Blur is indirectly encouraged. This is because when users offer higher “Max Borrow”, the more points a user can accumulate for future BLUR airdrop. 

Azuki as collateral

The lending story for Azuki takes a different trajectory compared to Milady. In the past 7 days, Azuki has witnessed a remarkable surge in trading volume, number of traders, and sales. Its trading volume has skyrocketed by 129.88%, the number of traders has soared by 135.82%, and sales have seen a notable increase of 92.85%. 

These figures indicate an increase in interest and demand for Azuki NFTs, especially when these transactions were made across several different NFT marketplaces.

The LTV ratios for Azuki NFTs are close to their actual value, indicating that the lending activity surrounding Azuki is more genuine and aligned with the NFTs’ worth. Lenders display confidence in the value and potential of Azuki NFTs by offering loans that closely reflect their market value.

These statistics highlight the exceptional growth and genuine lending activity surrounding Azuki. They serve as a strong testament to its value and future potential.

Closing words

In conclusion, the dominating NFT trading volume and lending amount within the Blur ecosystem raise several questions. In fact, these numbers do not necessarily reflect the overall efficiency of NFT adoption, as they are largely driven by experienced traders. However, they can still provide valuable insights into NFTs as assets and their potential.

It is important to recognize that NFTs can gain value as collateral, but precautions must be taken to prevent misuse. As Blur’s token airdrop concludes, we will gain a clearer understanding of how NFTs function as collateral in the future. We are committed to closely monitoring these developments and providing data-driven insights to our community and users.

5. Continue your learning journey with DappRadar

For a broader understanding of the dynamic NFT landscape, we encourage you to read, explore and gain data-powered insights with DappRadar.

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