Recently, nonfungible token (NFT) marketplace Blur introduced its collateralized lending protocol, Blend, enabling buyers to adopt a buy-now-pay-later approach in purchasing NFTs. Developed with the assistance of venture capital firm Paradigm, Blend aims to provide fee-free lending for borrowers and lenders using NFT collateral. The move elicited mixed reactions from the community.
Proponents of the move, such as Twitter user peepeedog.eth, hailed it as “massive for the space” and noted its potential to enhance efficiency by enabling owners to loan their ETH for yield. Others regarded it as a welcome distraction amidst an overall negative sentiment in the NFT space, referring to the notable decrease in NFT buyers in April as reported by analytics platform NFTGo.
On the other hand, critics raised red flags concerning the risks associated with NFT lending. One Twitter user underlined it as a dangerous venture, given the possibility of failing to repay the loan and losing a significant amount of money. Another user called out Blur, warning against acquiring loans for potentially overexposing oneself to the volatile NFT market. The adage of “only invest money you can afford to lose” was reiterated, with some even suggesting it borders on criminal behavior to offer loans in such an unpredictable space, mainly when minors could be involved.
Adding further fuel to the fire, web3 lawyer Jesse Hynes addressed the United States Securities and Exchange Commission (SEC) via Twitter, urging it to protect investors from what he termed “extremely dangerous” activities such as those offered by Blend. As of now, there has been no response from the SEC.
The creation of Blend highlights the competitive atmosphere building between Blur and its rival NFT marketplace OpenSea as both platforms strive to establish dominance in the realm of NFTs. Earlier this year, OpenSea eliminated fees to attract users from Blur, and most recently, it launched an advanced NFT marketplace aggregator.
Although the launch of Blend remains a subject of contention, it emphasizes the continual innovation occurring in the NFT space. While offering new opportunities and services, this innovation also presents potential downfalls and risks that consumers must be aware of when navigating the world of nonfungible tokens.