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Blur, a non-fungible token (NFT) marketplace catering to professionals, is once again in the news for venturing into the NFT lending arena. This development has prompted discussions about its potential repercussions on the overall market.
Blur introduced Blend, a peer-to-peer NFT lending platform, on Monday. The platform enables traders to temporarily lease their NFTs to collectors who wish to purchase blue-chip NFTs with a lower initial payment. NFT holders interested in earning extra income can list their tokens on the platform, receive loan proposals, and then transfer their NFT to the borrower via an escrow smart contract for a set period, much like a digital pawn shop.
Blur has stated that Blend is designed to facilitate the integration of new buyers into its ecosystem by reducing financial hurdles to access popular NFT collections. Consequently, it contributes to enhancing liquidity across the wider NFT landscape by boosting the number of traders and transactions.
According to data from NFT marketplace OpenSea, Blend may have played a role in the short-term uptick of floor prices for select blue-chip NFT collections. Since the platform's launch on May 1, the floor price for the popular Bored Ape Yacht Club collection has risen from 47 ETH (roughly $93,500) to approximately 50 ETH ($99,400). Similarly, the floor price for its Mutant Ape Yacht Club has increased from roughly 10.5 ETH ($20,900) to 11 ETH ($21,900).
While Blend seems to be contributing to a possible upswing in NFT markets, it may not be a suitable option for every novice trader looking to join the fray. The concern is that NFT lending platforms, including Blur, may enable collectors to acquire tokens with borrowed funds, which can lead to liquidity risks in the future if collection floors or cryptocurrency prices experience a downturn.