As described by the development team, Blend is a lending protocol that allows NFT holders to collateralize their assets to borrow ETH from others. Blend will connect borrowers and lenders in a P2P manner.
Lenders can select the desired interest rate for the loan, as well as the collection of NFTs they desire on Blend. Meanwhile, borrowers can view the options that best suit their needs and connect to a lender. In this respect, Blend is quite similar to BendDAO, a famous NFT lending project.
By default, Blend loans have fixed rates and never expire. Borrowers can repay at any time, while lenders can exit their positions by triggering a Dutch auction to find a new lender at a new rate. If that auction fails, the borrower is liquidated, and the lender takes possession of the collateral.
Blur expects Blend will help unlock liquidity for NFTs, similar to how loans have increased the potential for expansion in the traditional real estate market, as well as reinforcing the trend of NFT financialization or NFTFi.
Blur developed Blend with the help of venture capital firm Paradigm. The protocol supports NFT collateral and will be free to use for both borrowers and lenders. However, after the 180-day period, Blend fees can be turned on by BLUR holders.
Besides Blend, Blur also hinted about the launch of two new products that use Blend as a liquidity solution. Specifically, the platform will allow users to borrow ETH against NFTs and offers a “buy now, pay later” function. Collections supported by Blur on Blend at rollout include Azuki, Milady, and CryptoPunks.
Blur was just launched in October 2022 but has grown rapidly since then thanks to the BLUR token airdrop strategy for active NFT traders. However, this was controversial when it caused some investors to pump and dump NFTs in order to have more opportunities to receive airdrops in the future, affecting the floor prices of many famous NFT projects.