Blur, a popular Ethereum-based non-fungible token (NFT) marketplace, has launched its latest upgrade called Blend. The new NFT lending platform allows users to utilize non-fungible assets as loan collateral and earn interest by lending Ethereum (ETH) backed by digital tokens.
The team behind Blur recognizes that many individuals are interested in acquiring collectibles but may not have sufficient funds to invest. 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. Better yet, Blend enhances NFT liquidity in the process, providing ten times higher yield opportunities than other DeFi protocols available in the Web3 sphere.
The platform will charge no fees for the first 180 days after launch. Still, after this period, Blur’s DAO will decide which modifications take place on the platform, including platform fees for borrowers and lenders.
Despite Blur contracts previously undergoing audits by ChainLight and CodeArena, after operating on the mainnet for several years, the Blur DAO will soon 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.
As Blend becomes fully decentralized, users must be aware of the 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, borrowers can face interest rates up to 1,000% APY.
On the other hand, lenders assume the 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. However, 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 presents a promising advancement in the NFT and DeFi sphere, paving the way for a more financially available and inclusive ecosystem. Users should be aware of potential risks and research any product before making any investment.
In conclusion, Blend’s launch represents another significant step in the evolution of the NFT and DeFi marketplaces. The ability to use NFTs as collateral not only increases liquidity but also introduces a tremendous opportunity for individuals interested in acquiring collectibles. Additionally, its ten times higher yield opportunities than other DeFi protocols floating around the Web3 sphere make it an attractive option for investors interested in high returns. Although the potential risks exist, users must note the opportunities and proceed with caution accordingly.
