On Monday, the non-fungible tokens (NFTs) marketplace Blur launched Blend, a peer-to-peer perpetual lending protocol that supports NFT collateral. With Blend, NFT holders can lend their tokens to other users in exchange for a fixed interest rate. This allows NFT holders to unlock the value of their assets while retaining ownership.
A New Way to Access Liquidity
By allowing NFT holders to lend their tokens to others, Blend creates a new way to access liquidity. This comes as a vital step in the space, as accessing liquidity can be challenging. Unlike traditional assets, such as stocks or bonds, NFTs are illiquid and cannot be sold or traded. Blend helps in such a situation.
Blend operates on a peer-to-peer model, which means that borrowers and lenders transact directly with each other without the need for intermediaries. As a result, the lending process becomes faster, cheaper, and more transparent than traditional lending platforms.
Their whitepaper highlights how the new protocol differs from competitors like BendDAO and NFTfi, with its model providing access to liquidity by matching lenders with borrowers.
The protocol has other features like allowing lenders to liquidate their NFTs anytime, no expiration for borrows as long as the lender is willing to lend and avoiding Oracle dependencies.
How Does Blend Work?
To use Blend, NFT holders deposit their tokens into the platform and can set their desired interest rates and loan duration. Borrowers can then browse available NFTs and select the ones they wish to borrow. Once a loan agreement is reached, the borrower receives the NFT, and the lender receives the agreed-upon interest payments.
The loan duration is perpetual, meaning that borrowers can continue to use the NFT as long as they make their interest payments. This allows borrowers to access the value of the NFT without having to purchase it outright.
Following the news by Blur, the NFT marketplace native token fell 5.47% on the 1-hour candle to trade at $0.64353 as of press time. Blur has usurped OpenSea as the dominant NFT marketplace in the past few months, accounting for over 50% of the trading volume in the industry.
Blend represents an exciting new development in the world of NFTs and DeFi. Blend is poised to become a key player in the evolving crypto ecosystem by providing a new way of accessing liquidity.