Don’t Miss Out on Blur’s Game-Changing NFT Lending Protocol!

Key Points:

• NFTs marketplace Blur launched Blend, a P2P lending protocol that supports NFT collateral, to “financialize to scale” with zero fees from borrowers and lenders.
• Borrowers and lenders extend the loan expiration time by a predetermined period through a perpetual lending protocol without on-chain transactions.
• An interest-rate “Dutch auction” for refinancing is held when the lender wishes to terminate the loan against the borrower’s wishes.

On May 1, 2023, Blur, a nonfungible tokens (NFTs) marketplace, launched Blend, a peer-to-peer perpetual lending protocol that supports NFT collateral. The new platform was developed in collaboration with venture capital firm Paradigm, and its developers cite Blend’s rationale as a means of “financialization to scale.”

According to the developers, Blend has some unique features. For instance, it has neither oracle dependencies nor expiries. This means that borrowing positions can remain open indefinitely until terminated. Additionally, the protocol would collect zero fees from borrowers and lenders. Instead, the platform matches users who want to borrow against their nonfungible collateral with whatever lender offers the most competitive rate, using a sophisticated off-chain offer protocol.

Per design, Blend automatically “rolls a borrowing position for as long as some lender is willing to lend that amount against the collateral.” No on-chain transactions are required unless one party decides to exit the position or there is a change in the interest rate. This makes the whole process quite seamless.

By using a perpetual lending protocol, borrowers and lenders can extend the loan expiration time by a predetermined period by default. However, if a lender wishes to terminate the loan against the borrower’s wishes, an interest-rate “Dutch auction” for refinancing is held when the borrower has not repaid the debt at expiration. The auction begins at 0% refinance interest, with a steadily rising rate. This feature ensures that both parties have a say in the process.

Blend also has a provision for liquidating an NFT. According to the developers, “an NFT may be liquidated whenever a lender triggers a refinancing auction and nobody is willing to take over the debt at any interest rate.” This feature ensures that the platform remains stable and sustainable.

Additionally, the developers have explained that borrowers can repay the loan at any time on Blend. “If a borrower wants to change the amount they have borrowed or get a better interest rate, they can atomically take out a new loan against the collateral and use the new principal to repay the old loan,” they wrote. This ensures that the borrowers are not locked into the same rate forever.

Launched in the third quarter of 2022, Blur has rewarded its users with “care packages,” redeemable for BLUR tokens, since Feb. 14 to increase trading activity. The platform has since surpassed OpenSea in terms of trading volume, making it a formidable player in the NFTs marketplace.

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