Blur — one of the top Ethereum NFT marketplaces — has launched its latest upgrade, Blend. The new NFT lending platform allows users to utilize non-fungible assets as loan collateral and earn interest by lending ETH backed by the digital tokens.
The team behind Blur recognizes that many individuals are interested in acquiring collectibles, however, they may not have sufficient funds to get involved. So, this is where Blend’s novelty NFT lending platform comes into play.
Produced in partnership with Dan Robinson, Transmissions 11 and Paradigm, Blend provides perpetual loans without fixed repayment schedules that typical loaning companies implement. Moreover, despite loans usually accumulating interest until being repaid or refinanced by the lender, the protocol enables NFT collectors to secure loans using non-fungible assets as collateral. Consequently, liquidity providers can earn interest by lending their ETH, backed by an NFT.
1/ Introducing Blend: the Peer-to-Peer Perpetual Lending Protocol for NFTs.
Built in collaboration with @danrobinson and @transmissions11 at @paradigm, Blend enables 10x higher yield opportunities than current DeFi protocols and unlocks greater liquidity for NFTs.
Here’s how pic.twitter.com/uOFC6i3LSq
— Blur (@blur_io) May 1, 2023
Better still, Blend enhances NFT liquidity in the process. This is attributable to presenting 10x higher yield opportunities than other DeFi protocols floating around the Web3 sphere.
Blur DAO’s Contributions
The platform will charge no fees for the first 180 days after launch. However, after this period, Blur’s DAO will decide which modifications take place on the platform, including platform fees for borrowers and lenders alike.
Despite Blur contracts previously undergoing audits by ChainLight and CodeArena — after operating on the mainnet for several years — the Blur DAO will shortly control all aspects of the project. The idea behind this is for the project to become fully decentralized, meaning that no centralized authority can take center stage.
Potential Risks
As Blend becomes fully decentralized, users must be aware of potential risks involved in borrowing and lending. Three significant aspects include the loss of digital assets, unpaid loans, and the need to liquidate assets to cover outstanding loan balances.
On Blend, borrowers currently have up to 24 hours to repay their loans once a loan auction activates. Failure to do so will cause the loan’s interest to skyrocket, boosting other lenders’ appeal to buy out the loan. If another party takes over the loan, this can lead to borrowers facing interest rates up to 1,000% APY.
On the other hand, for lenders, there is a risk of borrowers failing to repay their loans and no other lenders being interested in taking it over, despite having an elevated interest rate. In this situation, the lender can obtain the collateralized digital asset 30 hours after the auction starts. Although, if this process occurs, there’s a chance that more than liquidating the NFT will be required to cover the outstanding loan balance.
Regardless of these risks, Blend still presents a promising advancement in the NFT and DeFi sphere, paving the way for a more financially available and inclusive ecosystem. It’s better to be aware of these possible risks than be none the wiser.
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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.
The post Blur Introduces Novel NFT Lending Platform, ‘Blend’ appeared first on NFT Plazas.
