The lending market for non-fungible tokens (NFTs) has seen a significant surge

The lending market for non-fungible tokens (NFTs) has experienced a remarkable increase, reaching a quarterly high of $2.13 billion in Q1. This represents a substantial 43.6% growth from the previous quarter.

Data from CoinGecko reveals that five of the top six platforms in the NFT lending market are experiencing higher volumes.

Blend Leads with 92.9% Market Share

In January, the NFT lending market reached a record $0.9 billion in monthly volume, surpassing the previous peak of $0.85 billion in June 2023. Blend emerged as the top NFT lending platform, capturing a market share of 92.9% and a monthly lending volume of $562.33 million in March 2024.

Since its launch in May 2023, Blend has consistently been the market leader, with its monthly share varying from 88.8% to 96.5%. In Q1 2024, Blend witnessed a 49.2% quarter-on-quarter increase in lending volume, reaching $2.02 billion.

Following Blend, Arcade and NFTfi are the next most popular platforms, holding 2.8% and 2.2% market share, with lending volumes of $16.94 million and $13.32 million respectively in March 2024.

Arcade achieved a new quarterly high of $39.46 million in Q1 2024, marking a 37.1% increase quarter-on-quarter, while NFTfi saw a 48.3% rise in lending volume to reach $35.88 million.

The remaining platforms, including X2Y2, BendDAO, and Parallel Finance, held smaller market shares ranging from 0.5% to 0.8%.

Incentives and Bitcoin Ordinals Influence

To encourage more user engagement, NFT lending platforms are introducing new incentives to boost trading activities. Arcade, supported by Pantera Capital, recently launched its “Clash of Clans” airdrop program in late February.

Similarly, other platforms like X2Y2 and BendDAO have also initiated token launches for their community members.

CoinGecko emphasized the impact of increasingly popular Bitcoin Ordinals on the NFT lending market, highlighting it as a trend to monitor. While Ethereum NFT collections currently dominate loan originations, the evolving landscape may bring about a shift in dynamics.

Blend, founded in May 2023, operates on a peer-to-peer lending model, allowing borrowers to use their NFTs as collateral while seeking lenders offering competitive interest rates.

Although the loans come with fixed interest rates, they do not have expiration dates. This flexibility enables borrowers to repay at their convenience, while lenders can exit their positions by auctioning off the collateralized NFTs through a Dutch auction mechanism.

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