Blend Is Now Live
Blur, in collaboration with Paradigm, launched Blend, a peer-to-peer perpetual lending protocol that supports NFT collateral without relying on oracles or expiries, offering market-determined interest rates. Blend's is now live with three NFT collections - CryptoPunks, Azuki, and Miladys and more to come soon.
The Deets
- Blend supports arbitrary collateral, including NFTs
- Interest rates and loan-to-value ratios determined by lenders' offers
- Liquidations triggered by the failure of a Dutch auction
- Peer-to-peer model for individual loan matching
- Buy Now, Pay Later (BNPL) option for NFT purchases
- Lending points replacing listing points for select collections
- Smart contracts audited by Code4rena and Chain Light
The Details
Blend is a new lending protocol that supports a wide range of collateral types, including NFTs. It differentiates itself by not relying on oracles or expiries in its core protocol, which avoids potential issues with price manipulation and trusted parties. Interest rates and loan-to-value ratios are determined by the terms that lenders are willing to offer.
Liquidations in Blend are triggered by the failure of a Dutch auction, which means that an NFT may be liquidated whenever a lender triggers a refinancing auction and no one is willing to take over the debt at any interest rate. This provides a market-driven approach to managing risk and maintaining solvency.
Blend uses a peer-to-peer model for matching loans individually, instead of pooling lenders' funds together. This approach assumes the existence of more sophisticated lenders who can participate in complex on- and off-chain protocols, evaluate risks, and use their own capital.
Most notably, the platform is offering a Buy Now, Pay Later (BNPL) option as well, requiring only an upfront payment (e.g., 8 ETH for a Punk), with the remainder being borrowed. Borrowers can repay their loans at any time to take full ownership of their NFTs or list them for sale and keep the profits.
Lending points are replacing listing points for Punks, Azuki, Milady, and other select collections. The points system may vary on a per-collection basis, with some collections still receiving 2x points and others earning 1x points.
🧐 Wait, What? BNPL Edition
Buy Now Pay Later (BNPL) lets you purchase an NFT using borrowed funds, with interest added to your loan balance daily. You can eventually repay the loan to own the NFT fully or sell the NFT, using part of the sale to repay the loan and keeping the remaining profit. If the NFT's floor price drops too close to your loan amount, the lender may require repayment or refinancing. If a new lender isn't found within 6 hours, you have 24 hours to repay or refinance the loan. You can repay the full amount or soon, partial amounts to extend the loan. If you don't want to repay, refinancing with a new lender can happen automatically if there are loan offers available.
❗️Why It Matters
NFT lending and the continued financialization of web3 has been slowly growing in recent months, but perhaps slower than demand would allow in part due to a lack of education and a familiar face in lending and borrowing. Now Blur, the top NFT marketplace, will offer both a trusted name and notable new dynamics for lending in the space. While the newest announcement may not end the Blur farming incentives that many hoped, it may still inject a new set of liquidity into market.
🎤 Community Quotes
🎬 Take Action
Users can start utilizing Blend's features now on Blur's marketplace.
