Lots of things have been going around Web3 lately, and Blur is making a massive move once again for the community!
The NFT marketplace recently introduced an opportunity for NFT collectors to borrow from whales and use their NFTs as collateral.
Although this seems new and exciting, does it really benefit both sides? Well, let’s dwell to know more.
Blur NFT Marketplace partnered with Paradigm, a Web3 investment firm, to launch their newest development – Blend.
For context, Blend is a peer-to-peer lending protocol for NFTs, allowing people to borrow and lend NFTs.
Basically, it’s similar to loaning money from a bank and serving your house, car, or any other valuable item as collateral.
But instead of these assets, your NFT will serve as payment to secure the loan if you can’t repay the borrowed money.
FACTORS INFLUENCING BLUR’S DECISION
As you’ve heard, Opensea reclaimed its top spot after it released Opensea Pro in the NFT market’s system.
Its features will allow collectors to find the best deals across 170 marketplaces that best fits their needs, namely:
- Live Cross-Marketplace Data: real-time user and collection activity updates across NFT marketplaces, such as trends, mints, and collection pages, within seconds.
- Instant Sales: allows you to sell your items for the best prices available by aggregating every type of offer on your items from marketplaces across the space. This includes Collection Offers, Bids, NFT pools, and more.
- Optimized Gas Fees: OpenSea Pro uses gas-optimized smart contracts, making it the most efficient place to purchase items across marketplaces.
- Other Features: Opensea also introduces mobile compatibility, full analytics and control over your inventory, watchlists, live mints overview, batch transfer, and more.
Because of these build-outs, Opensea was able to retrieve all of its user-base in only a matter of time.
This alarmed Blur’s position between their ongoing tension. As a result, the latter released Blend, responding to Opensea’s improvements.
BLEND’S FEATURES AND PROS
In contrast to Opensea Pro, Blend has features that support the potential of NFTs to scale in a trillion-dollar market financially.
- NFT lending – Most buyers need help paying an NFT with the exact set price. But because of this feature, collectors can now lend from whales to buy their desired NFTs without paying the total price upfront.
- More profits – Lenders get a yield and can liquidate their loan because of the interests paid by the borrower from the loan.
- Opportunities for borrowers – If borrowers cannot repay the loan on time, they will be given 24 hours to set it right. However, interest rates may increase during this time frame to entice other lenders to buy the lending process out.
Take note: if the borrower cannot fully pay the loan, the lender gets full ownership of the given collateral NFT.
This seems a win-win for both sides, right? Now, let’s talk about…
THE CONS ABOUT BLUR’S LENDING SYSTEM
Despite its exciting features, Blend also has a fair share of its disadvantages, making some degens bearish about its system.
First of all,
- A massive drawback for borrowers: Lenders can own your collateral NFT at any time from the start of the loan. As a result, the borrower has no choice but to accept the lender’s terms. So if the borrower cannot commit to the terms, your NFT will be liquidated.
- A problem for lenders: If the floor prices of the NFTs go down and the borrower cannot fully pay the loan, the lender seizes the collateral with a loss.
Because of these, degens in the Web3 space are having difficulty understanding how they could benefit from this trend.
WEB3 COMMUNITY SENTIMENTS
Although some remain bullish with the features, most degens in the space do not agree with this type of setting.
“I was trying to workout how their loan system benefits me, when the lender can call the loan due in an instant. Really trying to see the alpha lol.” A community member said.
Aside from that, OG degens also tried waking up other degens to avoid falling into a trap. Below is a tweet from Diamond NFT’s founder calling out Blur about Blend’s unfair system.
I read the @blur_io whitepaper on BLEND. It's bad. Really bad.
TLDR; it has numerous protections for the lender and exactly zero for the buyer.
Lender has the power to trigger a liquidation auction of your NFT at ANY time. Even literally a minute after the loan. /1
— Diamond Cruiser 💎🚢💎 (@Diamond_Cruiser) May 1, 2023
As Web3 continues to evolve, various NFT platforms are also breaking barriers to keep up with the pace.
Although their activeness is good for the space, it’s also essential to analyze if it’s bullish for the current community.
So that this way, these companies cannot only exploit users to meet their goals but also remind them of the most critical assets in Web3, the users.
In the meantime, what do you think about this update?
Editors’ Note: The Mega Maxi’s articles and its external content are not financial advice. Always DYOR.