The NFT landscape is rapidly changing with the announcement of Blend, a revolutionary P2P lending protocol for non-fungible tokens. Let’s see how this new system works and how it differs from traditional lending platforms.
Operation and innovation of the Blend protocol
Blend is an innovative loan protocol designed specifically for NFTs. It is an abbreviation of Blur Lending.
Unlike traditional lending platforms, Blend allows loan positions to remain open indefinitely. Interest rates are market-based, providing greater flexibility for users.
The protocol matches borrowers willing to use their NFTs as collateral with lenders willing to offer the most competitive rates, using a sophisticated off-chain offer protocol.
Blend Loans default to fixed interest rates and never expire. Borrowers can repay at any time, while lenders can exit their positions by triggering an auction to find a new lender at a new rate. If this auction fails, the borrower is liquidated and the lender takes possession of the collateral.
The bright future of NFT lending
The main purpose of Blend is of unlock NFT liquidity. NFT buyers still face the same problem as real estate buyers. Indeed, few people can pay the full price immediately, either to buy a house or a top NFT collection. The solution is the NFT loan.
For now, the protocol accepts three popular collections of NFTs (Punks, Azukis, and Miladys) as collateral. Also, more will be added soon.
Items in these collections can now be used as collateral to borrow ETH. Additionally, an investor can simply buy an item from one of these collections and pay it back later.
Blend represents an important step in the evolution of the NFT market. By offering an innovative and flexible P2P lending system, it paves the way for new opportunities for investors and collectors.
This innovative approach could potentially transform the way NFTs are perceived and used. Also, it makes NFTs more accessible and unlocks their liquidity. It remains to be seen how Blend will influence the NFT market in the long term, but one thing is certain: the future of NFT lending looks brighter than ever. Some countries do not hesitate to take the lead, such as Romania.
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