Blur Launches New NFT Lending Protocol Blend: Innovation and Challenges Coexist

Recently, Blur, in collaboration with a well-known investment institution, launched a P2P NFT lending protocol called Blend, and also introduced a loan feature for purchasing NFTs based on this protocol. This article will delve into the core characteristics, product advantages, and implementation methods of the Blend protocol.

Core Features of Blend

The Blend protocol has the following main features:

1. Peer-to-peer perpetual lending model, no fixed maturity date, no need to rely on oracles.
2. The lender can independently set the loan amount and annual interest rate, and publish the lending offer.
3. Borrowers can freely choose from the available offers.
4. The lender may choose to withdraw at any time, in which case the borrower must repay or re-borrow within 30 hours, otherwise they will face liquidation.
5. The borrower has the flexibility to repay at any time.
6. Supports the "buy now, pay later" model, which is a down payment plus a loan to purchase NFT.

Product Advantages

The core advantage of Blend lies in unifying non-essential elements, reducing system complexity, and achieving flexible migration of lending relationships within the system. It prices risks and returns through market competition, maximizing user satisfaction.

Compared to the traditional peer-to-peer model, Blend unifies the term in the three 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 has unified the exit and liquidation processes for lenders, essentially meaning that liquidation occurs when no one is willing to take over the project.

Although Blend seemingly fixes the collateralization ratio and interest rate, its highly flexible exit mechanism allows the effective terms to generally follow the market average. This is because if the terms are significantly worse than the market level, the borrower has the incentive to repay and take other offers; conversely, if the terms are significantly better than the market level, the lender has the incentive to exit and issue new offers.

For borrowers, Blend achieves complete flexibility in loan terms through the combination of perpetual loans and the ability to repay at any time. For lenders, Blend retains the customization advantages of the peer-to-peer model while enjoying liquidity advantages close to the peer-to-pool model, and they can also set their own risk control standards for flexible exit.

Loan Purchase NFT Function

Blend has also launched a feature for purchasing NFTs through loans, similar to mortgage loans in the real estate market. Users can initiate collateralized borrowing while purchasing NFTs, obtaining ownership of the NFTs with just a down payment, thereby improving capital efficiency. This integration of features is expected to attract a large number of new users to Blend and promote the growth of its ecosystem.

Other details

It is worth noting that Blend has not yet empowered its native token much. Token holders have the governance rights to set various parameters and the power to turn on the fee switch after six months, but there is still a significant degree of uncertainty overall.

Summary

The Blend protocol significantly improves efficiency by unifying non-essential elements based on the traditional peer-to-peer lending model. At the same time, its full integration with the Blur trading module has made considerable progress at the product level. However, in terms of token empowerment, Blend's performance is relatively average. As an innovative NFT lending protocol, Blend undoubtedly brings new possibilities to the market, but its long-term development still requires the test of time.