š£Ā The JPEGs have gone on layaway.
I repeat, you can now get your JPEGs on layaway. š£
In just one day,Ā Blurās new lending products catapulted it to the #1 NFT lender by volume and number of users, loaning over $16M.Ā It has overtaken BendDAO, NFTfi,Ā and Arcade.
The NFT marketplace giant now has started a buy now, pay later and a borrowing program, starting out with three main collections (Azuki, Miladys, CryptoPunks) and adding more soon. No fees, but borrowers pay interest set by the lender.
I previously wrote about the controversial platform as airdrop farmers churned some NFTs down to the ground while farming $BLUR. Now, lenders earn buckets of $BLUR as an incentive. š
Here are five key points to know about all this, whether you plan on getting into the NFT lending game or not.
1) HOW $BLUR POINTS EARNINGS HAVE CHANGED
In April, the community reacted strongly to Blur extending their 2X listing and bidding points to earn $BLUR. Many thought the incentive led to incessant airdrop farming, which may have been a net negative to NFT floor prices and morale. On May 1, a few things have changed.
ā”ļø There are now 3 types of ways to earn $BLUR: bidding, listing, and lending points
ā”ļø All 3 are worth 1 point each
ā”ļø Only 14 NFT collections (mostly āblue chipā) now quality for 2X bidding and listing points, all others are just 1X now
ā”ļø Collections that have a 2X lending points multiplier donāt get any 2X for listing as well
ā”ļø Points promotions on certain collections are subject to change
ā”ļø Loyalty still matters for max points
Itās still shocking that Blur came on the scene in October 2022 and took over market share in just a few short months. Their powerful UI and ease of trading made it easy to switch to themā¦ not to mention their disregard for royalty payments, which flippers loved. š„²
This is only Season 2 and it doesnāt look like Blur will stop incentivizing users with $BLUR anytime soon. I mean, weāre all keeping an eye out for an OpenSea token, but Iām not holding my breath. Theyāre pretty far behind at this point.
90-day NFT marketplace volume & users by @sealaunch
2) THIS LENDING WHALEāS POV
Cirrus is one of the biggest P2P NFT lenders in the game. He uses NFTfi and Arcade to loan out (at least) many hundreds of ETH every month. Cirrus loans out ETH to people looking to borrow on their NFTs without selling them outright.
He made an incredible thread about his perspective on how Blur Blend approaches NFT lending. But perhaps his most telling tweet came from how the top lenders on Blur arenāt earning even close to the interest he earns on other platforms.
This is because right now, the competitiveness is so massive that itās even drawn 0% interest loans from some of these lending whales. Why? Same reason why Blur farmers are wiling to lose money on massive trades. They want to earn as much $BLUR as possible.
Itās no surprise that the top Blur lender is also the top Blur farmer, MachiBigBrother himself. The age-old question remains: Will the $BLUR token value offset this type of risk?
Donāt forget: NFTfi now has their own reward system. Let the games begin.
3) BUY NOW PAY LATER: KNOW WHAT YOUāRE GETTING INTO
Besides borrowing, one of the biggest features Blur implemented is buy now, pay later (BNPL). It allows P2P lenders to trustlessly loan out the difference between the price of the NFT and what you are paying for it.
Pay 2 ETH for an Azuki instead of 15 ETH, and pay it off or sell it at any time. Interest rates vary, depending on what you put down.
The traditional, non-web3 BNPL industry has grown like wildfire in the past few years. It did $24 billion in loan volume in 2021, mostly on clothes, electronics, and furniture. Companies like PayPal Credit, Affirm, and Afterpay allow sales installments instead of paying all up-front.
However, itās not all smooth sailing:
57% of consumers said they regretted purchasing an item using BNPL, and 56% said they have missed at least one payment.
Now, imagine how that goes with JPEGs. Their values swing wildly, and they are much more expensive than what is traditionally financed with BNPL. The NFTfi loan default rate by volume is 9.6%.
Ok ok. Itās not exactly an apples-to-apples comparison, you degen. But this is just to say: you should absolutely know what youāre getting into if you use NFT lending, just like you should if you use traditional lending.
4) LENDERS & BORROWERS: THE FINE PRINT
Hereās the thing about Blend: Lenders can pull their loans at any time.Ā
Letās say you agree to pay a 0% interest loan with 2 ETH down on a 15 ETH Azuki. If you donāt pay back the rest or refinance within 30 hours, you would lose the 2 ETH along with the NFT.
A borrower can repay at any time. If a borrower wants to change the amount they have borrowed or get a better interest rate, they can take out a new loan against the collateral and use the new principal to repay the old loan.
The borrower can also sell it and make a profit, like Tyler from LuckyTrader did. We are only two days into this new protocol, so interest rates may settle and mature over time. But for now, itās the wild west.
5) HOW NFT FLOORS HAVE BEEN AFFECTED
Okay, so what we all really want to know is: will Blur Blend save our bags? Or will it plummet them further into doom?
The answer isā¦ depends on who you ask.
For the currently available collections for lending, there has been a bit of an initial floor boost since Blend was announced.
But will that be sustained? NFTStatistics expects more volatility in both directions. Ah, just what we need. š
Nftstatisticsā POV on what may happen in the near future.
My takeaway: Iām happy for people succeeding on this platform, but sad that NFTs and digital art are becoming more āaltcoins with picturesā than ever before.
Many thought the Blur announcement would be trait-based bidding, which may have helped with the issue of all NFTs being treated as floor ones. But as of now, your mid-rarity NFT is still a floor.
Iāve never dabbled in NFT lending or borrowing, but Blur is the latest to jump into it for additional liquidity creation. Perpetual loans, no expiries, with market-set interest rates. All in the name of $BLUR.
For additional details, check out the Blend whitepaper. Lend and borrow with caution!
meme by @carl_m101
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