Blur Launches Innovative NFT Lending Protocol Blend: In-Depth Analysis

Recently, a new type of NFT lending protocol called Blend has attracted widespread attention in the industry. This protocol was jointly developed by a well-known NFT trading platform and a top investment institution, aiming to bring more flexible and efficient lending methods to the NFT market.

The core features of the Blend protocol include:

• Peer-to-peer perpetual lending model, no fixed maturity date, no need to rely on oracle
• Lenders can set the loan amount and annualized return, while borrowers can choose suitable lending conditions.
• Lenders can withdraw at any time, while borrowers must repay or renew within 30 hours, otherwise they face liquidation risk.
• Borrowers can repay at any time, providing high flexibility.
• Supports the "buy now, pay later" model, allowing the purchase of NFT through a down payment plus a loan.

The main advantage of Blend lies in its simplification of the complexity of the lending system, enabling flexible migration of lending relationships within the system, and pricing risks and returns through market mechanisms to maximally meet user needs. This design concept can be likened to a "standardization" reform of the NFT lending market.

Compared to traditional peer-to-peer lending models, Blend unifies the three key elements of borrowing—collateral ratio, interest rate, and "term"—into a perpetual flexible model, greatly improving the liquidity issues for lenders. At the same time, Blend also integrates mechanisms for lenders to exit and liquidate, which essentially reflects the market's acceptance of specific NFT projects.

Although Blend superficially adopts a fixed collateralization ratio and interest rate, the actual effective lending terms will basically follow the market average level due to its highly flexible exit mechanism. This is because if the terms deviate significantly from the market level, both borrowers and lenders have the motivation to make adjustments, thereby maintaining a dynamic balance within the entire system.

For borrowers, Blend provides a highly flexible lending environment. The collateral ratio and interest rates fluctuate with market changes, while the perpetual loan and the option to repay at any time achieve complete flexibility in loan duration. For lenders, Blend retains the customization advantages of the peer-to-peer model while offering liquidity close to the peer-to-pool model, and it also allows lenders to exit flexibly based on their own risk control standards.

Blend has also launched an innovative "loan to buy NFT" feature, similar to the mortgage home purchase model in the real estate market. Users can purchase NFTs by making a down payment and simultaneously initiating a collateralized loan, thereby improving capital efficiency. The introduction of this feature is expected to bring a large number of new users to Blend, driving its rapid growth.

It is worth noting that Blend currently has relatively limited empowerment for its ecosystem tokens. Token holders have governance rights to set various parameters and the power to activate the fee switch after six months, but the specific implementation details remain to be observed.

Overall, Blend has achieved a significant improvement in efficiency by unifying and simplifying non-essential elements based on the traditional peer-to-peer lending model. Its deep integration with the trading module demonstrates enormous potential at the product level. However, in terms of the token economic model, Blend's design is relatively conservative, and there may be room for further optimization in the future.