New NFT lending protocol Blur brings buy now, pay later

New NFT lending protocol Blur brings buy now, pay later

Blend Enables Peer-to-Peer Loans and Buy Now, Pay Later Feature.

Blur, the leading NFT marketplace by trading volume, is diving into NFT lending with its new Blend protocol, which went live today.

The buy now, pay later option allows traders to purchase NFTs without having to bear the full cost of the transaction. Borrowers can buy the token in full once they have the money to repay the loan, or look to sell the property when it expands, pocketing the difference.

Blur's other product offerings include peer-to-peer lending - users can borrow against their NFTs with specific amounts and interest rates offered by individual lenders.

The lending features initially support three NFT collections - CryptoPunks, Azuki, and Milady - but the Blend protocol allows for any asset to be collateralized. The price of the Milady floor is up 30 per cent after a wave of leveraged buying.

The Blur team is releasing Blend under the same business license as Uniswap, the leading decentralized exchange in trading volume, used for its influential V3 protocol.

Blur has disrupted the NFT space since it launched in October last year. The NFT market and aggregator have been involved in an extended struggle to become the go-to platform for trading. After OpenSea launched a more directly competitive 'pro' version last month, Blur is again stepping into new territory.

NFT influencer Cirrus thinks blend will lead to a 'leverage-fueled run in NFTs,' while another user pointed out that unwary traders may not fully understand what they are getting into.

The release of two new products built on a new protocol hasn't shielded Blur's token from a down day in crypto markets - BLUR has been down nearly 9% in the past 24 hours, while BTC is down more than 4% and ETH nearly 3%.

With Blend, lenders can trigger a refinancing auction at any time. They would generally do so if a NFT's price falls, increasing the risk of the loan becoming undercollateralized or if they simply need the money back.

Refinancing auctions start at a low rate, slowly increasing until a new lender is found - in the case of a BNPL loan, the borrower will have 24 hours to either repay or refinance their loan if a new lender isn't found within six hours.

Blur loans have no fixed maturity date, borrowers can close out the loans at any time, while lenders can call for a refinancing auction at any time, resulting in either another lender stepping in or liquidating the collateral.

Parsec Finance founder Will Sheehan, a trading interface for DeFi, told The Defiant that the new Blend protocol differs a bit from the designs of projects like BendDAO and Paraspace, which have traditionally had an edge in the NFT lending space.

As an example of the pooled model in the broader DeFi space, he cites Compound, a protocol that pools lenders' fungible assets together for borrowers to use.

Dan Robinson, head of research at venture firm Paradigm, who contributed to Blend's creation, highlighted that the protocol doesn't rely on any oracles. With oracles providing data which is not native to the blockchain, they pose the risks of trusting a third party, which crypto proponents frequently try to avoid.

Even though the peer-to-peer model may not have become the dominant one in NFTs so far, Robinson has a notable track record in DeFi. The researcher, who was one of the primary contributors to Uniswap V3, was hailed as a key development in DeFi.

Paradigm led Blur's $11M seed round in 2022 and is also an investor in Uniswap.