On May 1, the nonfungible token marketplace Blur unveiled Blend, a peer-to-peer lending protocol that allows NFT collateral. Blend was developed in partnership with venture capital firm Paradigm and its creators assert that the protocol’s purpose is to “scale financialization.” Unlike other lending protocols, the Blend does not depend on oracles or expiries. This means that borrowing positions can remain open indefinitely until one party decides to exit the position or until there is a change in the interest rate. Additionally, Blend collects zero fees from borrowers and lenders. To match users with the most competitive rates, Blend employs an off-chain offering protocol. The protocol also automatically rolls over borrowing positions, as long as there is a willing lender.
Blend is a perpetual lending protocol, meaning that borrowers and lenders can extend the loan expiration time by a predetermined period by default. If a lender wishes to terminate the loan against the borrower’s wishes, a “Dutch auction” for refinancing is held with the interest rate starting at 0% and steadily increasing. An NFT can be liquidated when a lender triggers a refinancing auction and no one is willing to take over the debt at any interest rate. Borrowers have the option to repay the loan at any time and can also atomically take out a new loan against the collateral to repay the old loan or adjust the loan amount or interest rate.
Blur launched in Q3 of 2022 and has incentivized users with “care packages,” which can be redeemed for BLUR tokens starting from February 14, to increase trading activity. The platform surpassed OpenSea in terms of its trading volume.