NFT Marketplace Blur has launched a peer-to-peer lending protocol with no expiries and oracle dependencies.
In a series of tweets on May 1, Blur introduced its NFT lending protocol dubbed Blend, which is short for “Blur Lending.”
2/ Blend, short for Blur Lending, unlocks liquidity for NFTs.
Token markets exploded with the introduction of stronger financial primitives.
Now, NFT-native primitives will jump start the next stage of growth for the NFT market.
— Blur (@blur_io) May 1, 2023
Blend was developed in collaboration with Dan Robinson, one of the developers behind Uniswap V3, and pseudonymous researcher “Transmissions11” from venture capital firm Paradigm.
The perpetual lending protocol will let NFT holders take out loans against their digital collectible assets and liquidity providers earn interest on their ETH holdings, using NFTs as collateral.
“Every trillion dollar market relies on financialization to scale. NFTs are no different,” said Blur in a tweet.
Blur envisions that the same principles that govern home buyers purchases, through down payments and mortgages, can be applied to the NFT market. The ability to intuitively finance these purchases would give collectors the chance to access high-value NFT collections that previously appeared out of reach.
Blend does not depend on oracles, so prevailing interest rates and loan-to-value ratios will be set by the lenders themselves. The protocol will also have no expiries, automatically rolling a borrow position for as long as the lender is willing to lend against the amount of collateral.
Lenders can also trigger a refinancing auction, if the borrower has not repaid the debt at a predetermined expiration date. A position will be liquidated in the event that a Dutch auction fails.
Meanwhile, borrowers are free to repay the loan at any time and can atomically take out a new loan against their existing collateral and use this new principle to repay the old loan.
The protocol will start off with zero fees for borrowers and lenders, but holders of Blur’s native token BLUR can opt to change this in a governance vote after a 180-day waiting period.