Blur shortly gained recognition within the NFT sector, and its lending protocol, Mix, appears to be following swimsuit. Mix’s recognition has skyrocketed since its launch in Could, eclipsing its rivals and in addition dramatically growing the general quantity of NFT loans.
In keeping with knowledge from DappRadar, Mix secured 169,900 ETH ($308 million) in buying and selling quantity in simply 22 days. The buying and selling quantity throughout all NFT lending platforms? It reached about $375 million, which means that Mix secured a staggering 82 p.c of the lending quantity throughout all NFT lending protocols in lower than a month.
What’s extra, Mix’s market share is prone to enhance as its providing continues to develop. Presently, it helps loans backed by 4 NFT collections: Miladys, Azukis, DeGods, and wrapped versions of CryptoPunks. Nonetheless, Blur just lately introduced it might be launching lending for Clone X, and different tasks are anticipated to be added within the close to future.
1/ 🚨BLEND ANNOUNCEMENT🚨
Blur Lending (Mix) help can be reside shortly for Clone X. pic.twitter.com/oN2HR5hVTL
— Blur (@blur_io) May 25, 2023
Mix’s emergence within the NFT lending market follows Blur’s earlier success. In keeping with analytics from Delphi Digital, Blur secured 53% of the NFT market market share only a few months after its launch, shortly surpassing OpenSea to turn out to be the market chief. This was largely pushed by Blur’s native token airdrop in Q1 2023, which resulted in a major enhance in Ethereum’s NFT buying and selling volumes.
Regardless of Mix’s spectacular market dominance, the apply of utilizing NFTs as collateral for loans just isn’t with out its dangers.
What to know
With Mix, Debtors pledge their NFTs as safety for a mortgage, set up the circumstances of the mortgage, and are given Ethereum from a lender whereas the NFT stays as collateral.
Whereas it looks as if a dream come true to have the ability to buy blue-chip NFTs — or different gadgets — with out having the required funds upfront, many have already skilled the downsides of such practices. For instance, what occurs when ground costs all of the sudden drop?
A scenario like this occurred in 2022, when Bored Ape Yacht Membership (BAYC) NFT prices dropped by 80% in six weeks. Those that had over-leveraged themselves by utilizing their Apes as collateral for loans confronted margin calls, a scenario the place lenders request extra collateral to compensate for the decreased worth of the asset.
However regardless of the dangers, Blur reveals no indicators of slowing down. The corporate introduced a brand new function on Could 24 that can enable customers to “lengthen [their] loans by paying down as little as 0.1 ETH as a substitute of repaying the complete quantity without delay.”
1/ 🚨FEATURE ANNOUNCEMENT🚨
Now you can borrow ETH and pay again your mortgage in small increments over time as a substitute of abruptly.
This works for NFTs purchased with BNPL and NFTs you borrow instantly with. pic.twitter.com/GtUzAzDBwp
— Blur (@blur_io) May 24, 2023
This strategic transfer just isn’t solely prone to retain present customers but in addition to proceed to draw new members to the platform. Nonetheless, whereas Mix’s speedy ascension within the NFT lending market is undoubtedly spectacular, it will be important for members to know and navigate the inherent dangers concerned in utilizing NFTs as collateral for loans.
Editor’s notice: This text was written by an nft now workers member in collaboration with OpenAI’s GPT-4.