On May 1, non-fungible token (NFT) marketplace Blur launched Blend, a peer-to-peer perpetual lending protocol that supports NFT collateral. Co-developed with venture capital firm Paradigm, the developers pitch Blend's rationale as a means of “financializ ing scale.” Blend has neither oracle dependencies nor expiration, allowing borrow positions to be open indefinitely until terminated. The developers also claim that the protocol will charge zero fees from borrowers and lenders:
“Blend uses a sophisticated off-chain quotation protocol to match users who want to borrow against non-fungible collateral with any lender willing to offer the most competitive rate.” By design, Blend automatically “rolls over a lending position whenever a lender is willing to lend that amount as collateral.” To do this, no on-chain transactions are required unless one party decides to exit the position or the interest rate changes.
By using a perpetual lending agreement, the borrower and lender default to extending the maturity of the loan for a predetermined period. If a lender terminates a loan against a borrower's wishes, an interest rate "Dutch auction" is held to refinance when the borrower's deb t falls due. Auctions start with a 0% refinance rate, with rates rising steadily. “In Blend, whenever a lender triggers a refinancing auction and no one is willing to take over the debt at any rate, the NFT may be liquidated.”
That said, the developer explained that borrowers can repay their loans at any time on Blend. “If a borrower wants to change the amount they borrow or get a better rate, they can atomically draw a new loan from the collateral and use the new principal to pay off the old loan,” they wrote. Launching in Q3 2022, Blur will reward users with "care packages" from February 14, redeemable for BLUR tokens to increase transaction activity. The platform has surpassed OpenSea in terms of transaction volume.
