Blend is a novel peer-to-peer lending protocol developed by Paradigm researchers and implemented by Blur that allows users to borrow ETH by leveraging their NFTs. What sets Blend apart from other lending protocols in the NFTfi space is its unique design, which eliminates Oracle dependencies and expiries. Consequently, borrowing positions on Blend remain open indefinitely until repaid or liquidated, with interest rates being set by the market.
Unlike conventional peer-to-pool lending models such as BendDAO, Blend employs an off-chain offer protocol that matches borrowers with lenders offering the most attractive rates. This enables borrowers to repay their loans at their convenience while allowing lenders to opt out of their positions by initiating a Dutch auction to find a replacement lender with a different rate. In the event that the auction fails, the borrower’s collateral is liquidated, and the lender takes ownership of the asset.
Blur has introduced two new offerings on its platform by implementing: Borrowing and Buy Now Pay Later (BNPL). The initial rollout of these features supports three collections: CryptoPunks, Azuki, and Milady, with plans to integrate additional collections in the future.
Through the borrowing feature, NFT holders can easily obtain ETH against their digital collectibles without having to sell them. On the other hand, BNPL is a mortgage-style system that enables users to purchase an NFT with an upfront payment while creating a Blend borrowing position that must be paid down over time to cover the remaining amount.
On the lending side, lending ETH on Blend allows users to earn yield and Lending Points on the platform, allowing previously deposited funds into the Blur Pool to bid on the platform and make loan offers on selected collections.
This new implementation allows Blur to solidify its position further as they expand the product suite available for pro traders and further financialize NFT as an asset class. This also adds an additional utility to BLUR, their governance token, as it allows BLUR holders to govern Blend’s parameters and future product upgrades. This is likely just one of the many verticals Blur is expanding upon as they create an NFT omnichannel that unifies the UX in a single place, akin to typical E-commerce platforms like Amazon/Alibaba that we see today.