NFT Marketplace Blur Launches Blend, a Peer-to-Peer NFT Lending Protocol

05.01.2023

Market Overview: 

This week we have the release of 2 key macro drivers, the FOMC rate decision on Wednesday and unemployment report on Friday. A 25 bps interest rate hike is a foregone conclusion although following the First Republic Bank collapse, the probability of a Fed pause in May did go up to above 10% from 0% last week. Under the hood, the rate hike will continue to add pressure to regional bank balance sheets. 

It appears we’re back to macro factors driving markets. The risk now is how hawkish the Fed leans in its statements post the rate hike. The May 1 ISM, PMI and construction spending numbers were stronger than expected so we believe this is a real risk factor. Furthermore additional bank contagion has been contained with the FDIC effectively providing a de facto coverage for uninsured FRC depositors and the 3 recent bank failures so far.

Against this backdrop, we’re in a risk off mode in crypto at the moment. This is evident in the continued dominance of BTC relative to ETH performance, declining from a ratio of 0.071 around the upgrade to the current 0.0646. The option market signals the same with the skew (C-P) positive for BTC and negative for ETH. Also importantly, there has been a significant drop in trading volumes across both CEXs and DEXs on a weekly and monthly bases. This seems to be increasing market impact and slippage. Hence the market is more vulnerable to supply (and demand) shocks with cascading liquidations more of a risk factor.

NFT Market News:

NFT Marketplace Blur Expands Into NFT Lending

Blur, an NFT marketplace, has announced the launch of its peer-to-peer NFT lending protocol, Blend, short for Blur lending. The platform is designed to  enable traders to increase NFT liquidity by allowing buyers to provide collateral for their token purchases. This will enable new buyers to access expensive collections like Bored Ape Yacht Club and CryptoPunk NFTs by putting a percentage of the total cost down instead of the full price up front. CoinDesk has compared the protocol to the mortgage model where home buyers put down a down payment or deposit on a property and pay off the remaining balance over the lifetime of the mortgage.

According to Blur, the product was developed in collaboration with Dan Robinson, the head of research at venture capital firm Paradigm and an investor in decentralized exchange (DEX) Uniswap. The Blur team also announced that the protocol will have 0  fees for traders and lenders which could give them a competitive advantage to existing NFT lending protocols such as BendDao and ParaSpace. The platform is designed to be flexible, permissionless, and supports arbitrary collateral with no oracle dependencies.

The launch of Blend comes during the airdrop period of Blur’s native BLUR token, near the end of Season 2. Despite holding its spot as the leading NFT marketplace for several months, Blur has seen a decline in aggregate NFT trading volumes in recent weeks. With the launch of Blend, Blur aims to open up new opportunities for lenders and borrowers seeking to enter the market, ultimately expanding the market’s financialization and scalability.

Latest News:

WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking this metric in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

• Franklin Templeton, with about $1.4 trillion assets under management, said its OnChain U.S. Government Money Market Fund (FOBXX) is now supported on Ethereum via layer 2 blockchain Polygon. The investment giant said in a press release, during Consensus 2023, that it continues to see operational efficiencies through use of blockchain-integrated systems, including increased security and faster transaction processing.
• MasterCard revealed a new partnership with Polygon (MATIC), Ava, and Aptos, among others, on a joint venture set to advance their innovative work in blockchain technology. The product, dubbed MasterCard Crypto Credential, will enhance “trust in the blockchain ecosystem,” according to an official announcement at Consensus 23 on April 28. The New York-based company is committed to expanding its Bitcoin and crypto card adoption. The crypto card program is designed to enable users’ digital asset use through MasterCard payment technology. Currently, the company boasts over three billion cards in circulation worldwide and is accepted at more than 90 million locations. 

REGULATORY ROUNDUP: We’re living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and exerting political influence.

• Coinbase took legal action against the SEC last week, asking a federal judge to force the regulator to share its answer on Coinbase’s July 2022 petition on whether existing securities rule-making processes could be extended to the crypto industry. The 2022 petition did not receive a specific public response from the SEC, which has pursued a spate of enforcement actions against individuals and entities in the crypto industry.
• Hong Kong’s Securities and Futures Commission announced it will release guidelines on the licensing regime for virtual-asset exchanges in May.
• Binance.US has pulled out of the $1.3b deal to buy bankrupt crypto exchange/lender Voyager Digital, citing a “hostile” regulatory climate in the United States. The US arm of cryptocurrency exchange Binance revealed that it has exercised its right to terminate the asset purchase agreement with Voyager. It added: “While our hope throughout this process was to help Voyager’s customers access their crypto in kind, the hostile and uncertain regulatory climate in the United States has introduced an unpredictable operating environment.” Voyager noted that while the development is disappointing, its “Chapter 11 plan allows for direct distribution of cash and crypto to customers via the Voyager platform.”

Disclaimer: The views and opinions expressed herein are those of the author alone and do not represent Wave Digital Assets LLC or any of its affiliates (collectively, “Wave”). The author and/or Wave may hold investment positions in some of the assets discussed. Nothing in this material or linked information should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. This material is not intended to provide accounting, legal or tax advice. Certain information contained herein has been obtained from third-party sources, has not been independently verified and should not be viewed as being endorsed by Wave. Such information is believed to be accurate as of the date of its publication. No representation or warranty is made, express or implied, with respect to the accuracy or completeness, and readers should not place undue reliance on the information contained or linked to herein. Certain statements in this material provide predictions and there is no guarantee that such predictions are currently accurate or will ultimately be realized. Past performance is not indicative of future results.

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