In-depth Analysis of Blur's Newly Launched NFT Lending Protocol Blend

Recently, a new P2P NFT lending protocol called Blend has garnered widespread attention in the industry. This protocol not only supports traditional NFT collateralized lending but also innovatively introduces the "loan to purchase NFT" feature. This article will delve into the core characteristics and product advantages of the Blend protocol.

Core Features of Blend

The Blend protocol has the following notable features:

1. Peer-to-peer perpetual lending model, with no fixed maturity date and no reliance on oracles.
2. The lender can independently set the loan amount and annualized interest rate, and publish the lending invitation.
3. Borrowers can freely choose from existing invitations.
4. If the lender needs to exit, the borrower has a 30-hour grace period to repay or renew the loan.
5. The borrower may repay the loan at any time.
6. Supports the "buy now, pay later" model, allowing users to purchase NFTs through a down payment plus a loan.

Product Advantage Analysis

The core advantage of Blend lies in its simplification of system complexity and unification of non-essential elements, allowing lending relationships to flexibly migrate within the system. It prices risk and returns through a market game mechanism, maximizing user satisfaction.

Compared to traditional peer-to-peer lending models, Blend unifies the "term" among the three key elements of borrowing (collateral ratio, interest rate, term) into a perpetual flexible model, significantly improving the liquidity issues for lenders. At the same time, Blend also integrates the exit and liquidation processes for lenders, completely giving them the flexibility to handle exit decisions.

Although Blend has seemingly fixed the collateral ratio and interest rate, the actual effective terms will basically follow the market average due to its highly flexible exit mechanism. This is because if the terms deviate significantly from the market level, either the borrower or the lender has the incentive to make adjustments.

For borrowers, Blend achieves complete flexibility in loan terms through the setting of perpetual and anytime repayments. For lenders, Blend retains the customization advantages of the peer-to-peer model while also providing liquidity advantages close to the peer-to-pool model, and allows lenders to set their own risk control standards and exit flexibly.

Loan Purchase NFT Feature

The "loan purchase NFT" feature of Blend is similar to a mortgage loan, allowing users to initiate collateral borrowing while purchasing NFTs, obtaining ownership of the NFT by only paying a down payment. This feature not only improves capital utilization efficiency but also helps attract a large number of new users, promoting the rapid growth of Blend.

Other Features

According to the design document, when the lender exits, the system will initiate the Dutch auction mechanism. The interest rate will gradually rise from 0% to 1000%, during which new lenders can provide lending services at any time. If the interest rate reaches 1000% and there is still no buyer, the system will liquidate the borrower and transfer the mortgaged NFT to the current lender.

It is worth noting that Blend has not yet empowered its native token extensively. Token holders have governance rights to set various parameters and the power to enable the fee switch after six months, but the specific implementation details remain uncertain.

Summary

The Blend protocol significantly improves efficiency by unifying unnecessary elements based on traditional peer-to-peer lending models. At the same time, its deep integration with the trading module brings substantial improvements at the product level. Although it is relatively ordinary in terms of token empowerment, Blend undoubtedly brings new possibilities and imaginative space to the NFT lending market.