Blend: Disrupting NFT Financialization

When the market retraces and borrowers are unable to repay, it could escalate the selling pressure and lead to a liquidation cascade as lenders look for liquidity. As for the lender, in other peer-to-peer protocols, having an expiry date means the lender cannot exit their position beforehand. This report provides a walkthrough of how the Blend protocol works, highlights the differences that separate Blend from its peer-to-peer competitors, and how lending points tie in with their airdrop criteria. Blend has now become one of the leading NFT lending platforms, facilitating over 15.8k loans totaling 123.5k ETH ($224.4m) in volume from 1.2k unique borrowers and 1.6k lenders. On May 1, Blur announced the launch of Blend, a peer-to-peer perpetual NFT lending and borrowing protocol built in partnership with Paradigm.
Blend incorporates two different products, namely lending and borrowing, and Buy Now, Pay Later (BNPL). Their bidding and listing points system for BLUR airdrops to incentivize liquidity has also contributed significantly to the marketplace's rapid success. Let’s say Alice uses her NFTs to borrow from the Steady Teddys / BERA lending market.
Blur has replaced listing points with lending points for the collections supported by Blend to incentivize liquidity for potential borrowers. It remains to be seen what impacts introducing such leverage to these collections will have on their respective floor prices in the long term, but it could lead to more volatile price movements as traders lever up during price appreciation. As Punk9059 highlights, the announcement of MAYC, BAYC, and DeGods support for Blend resulted in the floor price appreciation for the subsequent collections. Specifically, while BNPL allows smaller traders to enter a more expensive collection with less capital upfront, many who choose this option probably do not have enough ETH to repay the loan if the lender calls.

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Then, discover action-packed rides and attractions where the movie thrills come to life! The future is defined by systems thinking, where the highest returns are secured by understanding the interconnected mechanics of tokenomics , smart contract security , and the underlying economic incentives of the chosen protocol. As the complexity of smart contracts for dNFTs and cross-chain operations increases, so does the risk of technical failure. Tokenizing assets like real estate, commodities, or revenue-sharing agreements into non-fungible tokens provides collateral with intrinsic, verifiable value that is less susceptible to crypto market speculation. This programmability allows the asset to serve as a self-adjusting financial instrument, providing a more transparent and predictable basis for lending. In a DeFi context, a dNFT could be programmed to reflect its actual utility and risk profile in real-time.
The implication is that borrowers have no incentive to reclaim their NFT because it is currently worth less than their debt. The floor may continue to fall, resulting in panic selling and massive floor undercutting. With BAYC liquidity down 13.3% compared to 0.5% of the previous week (NFTGo.io), things don't look good for the affected holders. Now that you have understood how the protocol works, how does it affect BAYC?
On top of having fixed lending terms for borrowers, what sets Blend apart from other peer-to-peer lending protocols is that loan offers on Blend do not have expiry dates, which is much more appealing for both parties. Thus, the protocol leaves the lender to decide the amount of risk they are willing to take on via the loan-to-value (LTV) ratio and interest rates. There are three main models of NFT lending protocols that currently exist; perp-like NFT protocols (such as Floor Perps and Papr), peer-to-pool (such as BendDAO and JPEG'd), and peer-to-peer (such as NFTfi and MetaStreet). The External Collateral Liquidator is a component in the MetaStreet v2 protocol responsible for facilitating the liquidation of defaulted loan collateral through external marketplaces or processes.

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Price divergence between the NFT and its paired token in a liquidity pool. NFT staking is the most direct method, where an NFT holder locks their asset into a specific protocol’s smart contract to earn rewards. The current landscape of NFT-based passive income is defined by three primary strategies ∞ staking, collateralized lending, and specialized yield farming. The protocol's Liquidation bid requirements were also poorly designed, failing to account for VOLATILITY and the fact that the OpenSea floor is typically 5% higher than the global floor. When this happens, it automatically triggers a 48-hour liquidation protection window enabling borrowers to pay off the debt and reclaim their NFT. The protocol provides a trustless liquidity solution to NFT holders who require ETH  but do not wish to sell their NFTs.
With Blend, Blur aims to unlock greater liquidity for NFTs, offer a competitive yield to traditional DeFi protocols, and disrupt the NFT financialization landscape. ✅ Now Alice’s borrow limit (42.5 WBERA) is greater than her debt (30.5 WBERA), so liquidation ends automatically. Bob pays 59.5 BERA to the protocol, receives Teddy #8024, and helps reduce Alice’s debt. ⚠️ Now, her debt exceeds the borrow limit, triggering liquidation.

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Furthermore, this is also beneficial to smaller retail traders with less capital on hand, as they can profit from the price appreciation of blue-chip projects. In this case, the borrower will likely get liquidated since no new lenders were willing to step in as the LTV ratio and APY increased. Most of the NFTs in auction still have between 24 to 27 hours before the borrower defaults, which suggests that, in most cases, a new lender is willing to step in at a reasonable LTV ratio and interest rate.

Example Liquidation Flow

• This would also help bootstrap the launch of Blend, as more liquidity leads to better offers.
• At Paddle, anyone can participate in liquidations directly through the frontend to help maintain the stability and integrity of the platform.
• And don’t miss the chance to learn Hollywood movie-making secrets at the Special Effects Show, where real Hollywood stuntmen and cutting-edge technology come together to recreate scenes from your favourite blockbuster movies!
• The origins of the theme park, which first opened in 1964, are in Universal Studios itself, which is still very much operational today.
• NFT holders of these collections can borrow ETH against their NFTs at a fixed rate and no expiries, meaning borrowers can repay at any time and are only subject to liquidation by market-determined interest rates.
• With BAYC liquidity down 13.3% compared to 0.5% of the previous week (NFTGo.io), things don’t look good for the affected holders.

When liquidation proceeds are returned to the Pool, the onCollateralLiquidated callback function is betory casino review invoked.
If liquidation continues and only one NFT is left, a liquidator may repay more than the borrower's total debt to claim the NFT. This process maximizes flexibility in liquidation strategies while maintaining a secure and accountable protocol for recovering value from defaulted loans. For more tips on planning your visit, check out how to save money at theme parks, Universal Studios Hollywood for young kids, and how to skip the lines at California theme parks. There are several great partner hotels located within a mile or two of the theme park, and many of them offer shuttle service to and from the park as well as package deals. The three-block area located adjacent to the theme park is lined with shops and restaurants including The Toothsome Chocolate Emporium and Savory Feast Kitchen, the NBC Sports Grill & Bar and VooDoo Doughnut, as well as a state-of-the-art movie theatre and IMAX. The show has taken on a life of its own at the theme park as a showcase for stunt performers and special effects, from jumping jet-skiers to an in-your-face plane crash (if you sit close to the splash zone seats, you will get splashed, as the name implies).

If collateral has a liquidation threshold of 90%, the loan will be liquidated when the debt value is worth 90% of the collateral value. “The liquidation threshold is the maximum loan to value (LTV) which means debt plus interest to collateral value. NFT holders can instantly borrow ETH using their NFTs as collateral through the lending pool, while depositors provide ETH liquidity to earn interest. If no new lender is willing to extend the loan after the 30-hour window, the borrower is liquidated, and the lender gets possession of the NFT or ETH (but only when the NFT's floor price is below the loan amount). In other peer-to-peer protocols, borrowers need to close or roll their positions before the expiry date, which would result in the lender confiscating their NFT collateral.

• So, come and experience Hollywood… Universal Studios Hollywood, the world’s largest real-life movie studio and theme park!
• As seen in the chart above, the Dutch auction starts at a 0% interest rate and increases until a new lender steps in to take over the loan.
• The laughs keep coming after the ride with an interactive, Minion-inspired dance party.
• The theme park’s rides and attractions are inspired by popular movies, television series, and games.
• Then, star in the thrilling rides, shows and attractions that cast you inside the movie action.
• By depositing your NFT as collateral, the owner can borrow and repay ETH at any time.

As you make your way onto the ride, Hagrid gives instructions on the proper way to approach a Hippogriff. Fight alongside Optimus Prime and try to survive as you protect the Allspark from Decepticons over four stories tall. Prepare for the greatest battle you’ll ever ride! The laughs keep coming after the ride with an interactive, Minion-inspired dance party. Join Gru, his daughters and the mischievous Minions on a heartwarming and thrilling ride. Grab a seat with The Simpsons™ on a virtual reality roller coaster ride.

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Fixed-term lending goes hand-in-hand with the protocol's oracle-free approach to reduce complexity, as using oracles to determine the assets' values (either the collection's average or floor price), interest rates, or liquidation parameters, would incur additional risks such as faulty oracle readings. However, there are some distinctions in the implementation that Blur has taken that differentiate their lending product from other peer-to-peer NFT lending protocols, including zero protocol fees for both borrowers and lenders, no oracle dependencies, no loan expiries, and refinancing auctions. Blend has taken the peer-to-peer approach to its design due to inefficiencies of on-chain governance and centralization issues that liquidity pool-based protocols inherit from attempting to manage lender deposits. Future protocols are working on secure bridging mechanisms to allow NFTs to be used as collateral or staked across multiple chains, dramatically increasing their potential market and liquidity pool size. This process is facilitated by specialized peer-to-peer (P2P) or peer-to-pool (P2Pool) lending protocols.
The theme park’s rides and attractions are inspired by popular movies, television series, and games. The successful participant will treat their NFT holdings not as static images, but as programmable capital ∞ assets capable of being staked for governance tokens, collateralized for short-term liquidity, or fractionalized to reduce capital risk and increase accessibility. The goal is to create a single, unified market for NFT collateral, where a Layer 2 solution or a secure bridging protocol can verify the ownership and status of an NFT from any chain (e.g. an Ethereum NFT used to borrow tokens on a Solana-based lending protocol). Managing risk in NFT DeFi is complex due to the inherent illiquidity and price volatility of unique assets. The P2Pool model is more scalable, using an Automated Market Maker (AMM) for NFTs to provide instant liquidity based on an oracle’s valuation, while the P2P model requires a specific lender to manually agree to the terms of the loan. Each method utilizes a different mechanism to extract value from the non-fungible asset, catering to varying risk appetites and liquidity needs.
They can continue repaying debt and claiming NFTs until the position becomes healthy again. To seize an NFT, a liquidator pays 70% of the NFT’s current Price Index. This means the process will automatically stop once the borrower's debt drops back below his Borrow Limit.