According to a recent report by non-fungible token (NFT) money market protocol Paraspace and multi-chain wallet BitKeep, NFT lending or NFTFi loans now exceed $430 million, involving 43,521 borrowers. The highest collateral ratios are for the most popular N FT series such as Wrapped CryptoPunks, Bored Ape Yacht Club, and Mutant Ape Yacht Club.
From January to March, NFTFi added $25 million in outstanding loans, according to researchers from Paraspace and BitKeep. Also contributing is the introduction of a digital collectibles lending protocol by NFT marketplace Blur, which surpassed $16 million in loans a day after launch, led by Taiwanese celebrity Machi Big Brother. The real boost, however, was the invention of Bitcoin Ordinals, which boosted total NFT market volume to $1.5 billion in March, but shrunk to $330 million in May. Despite the growth, researchers from Paraspace and BitKeep warned that Liquidity issues remain a constant theme in the industry: "The main reason for the lack of liquidity in NFT transactions is the limited number of users, difficult pricing, and high NFT prices. Therefore, we observed two extreme situations, that is,TOP 10 NFT maintains a certain level of liquidity, and there is almost no fluctuation between projects, while Other NFTs are sold at discounted prices.”
In a statement to Cointelegraph, the Paraspace NFT developer explained that despite accumulating more than $280 million in NFT loans, the protocol has seen only 16 NFT liquidations since it began operations last year, with no bad debts. its success to rules that only allow the most established and liquid NFTs or blue-chip NFTs as collateral. The barrier to entry for blue-chip NFTs is usually very high, with an average price between $11,000 and $120,000. “Usually, users can only borrow E TH against a single NFT. For us, users can use a basket of NFT+ERC20 (3 BAYC + 1 AZUKI + 2 BTC) to borrow collectible assets (say 10 ETH + 10 USDT + 100 APE). This gives our platform the opportunity to aggregate Liquidity in one place, increasing the capital efficiency of liquidity.”
Still, the developers of both Paraspace and BitKeep warn that NFTs are a new market and that “a lack of historical data and generally accepted methods of valuation analysis makes pricing difficult.” Thus, differing perceptions of rarity based on subjective perceptions lead to Overpriced There are differences even within the same NFT series. Regarding the future prospects of the market, the developer commented: "High-quality NFTs often have a strong community consensus, team background, and distinctive artistic style. However, the threshold for ordinary users to participate ate in blue-chip or popular NFTs is getting higher and higher. Now some solutions have emerged, such as NFT fragmentation, NFT staking and the rise of NFT liquidity platforms.”
