Real-World Assets May Breathe New Life into the Struggling NFT Lending Market: DappRadar
Connecting real-world assets with non-fungible tokens (NFTs) is one of the primary factors that could rejuvenate the declining NFT lending sector, which is currently facing a significant drop in volumes and user engagement, according to blockchain analytics platform DappRadar.
According to DappRadar analyst Sara Gherghelas, the NFT lending market—which permits NFT holders to secure loans using their tokens—has seen a staggering 97% decrease in volumes, falling from approximately $1 billion in January 2024 to $50 million by May.
Gherghelas emphasized that for NFT lending to “advance beyond its current state,” it requires “new catalysts” like real-world asset NFTs, including tokenized real estate or yield-generating assets, which can provide more stable and trustworthy collateral options.
“Up to now, 2025 has not given a compelling reason for NFT lending to recover,” she remarked. “Even though the infrastructure remains intact and platforms are operational, overall activity has diminished.”
“Currently, the sector appears to be in a holding pattern, awaiting either a market recovery or a new application to spark renewed interest.”
Gherghelas also noted that additional factors that could revitalize NFT lending include tools that simplify the lending process for NFT holders, and the development of “smart infrastructure,” such as undercollateralized loans, credit scoring, and AI-driven risk assessment.
The report indicated that since January of last year, borrower activity has plummeted by 90%, while the number of lenders has decreased by 78%.
The average size of NFT loans has also suffered, dropping from a peak of $22,000 in 2022 to $4,000 in May—a 71% decline year-over-year.
Gherghelas pointed out that this trend “suggests that users are either borrowing against lower-value assets or are becoming more cautious about their leverage.”
The average duration of loans has also shortened; after averaging approximately 40 days in 2023, it has decreased to 31 days and has remained steady throughout 2024 and into 2025.
Gherghelas suggested that this phenomenon may indicate “more frequent loans being taken out for shorter durations, possibly reflecting more strategic liquidity maneuvers.”
NFT Market Downturn Impacts Lending
The slowdown in NFT lending is partly attributed to the broader decline in the NFT market, which has experienced a 61% drop in volumes in the first quarter, falling to $1.5 billion from $4.1 billion a year ago.
“With the value of collateral diminishing, lending activities have naturally declined,” Gherghelas stated. “Although a few exceptions have managed to maintain their traction, they remain outliers and insufficient to rejuvenate the sector.”
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The landscape for protocols has also become narrower, with only eight active NFT lending applications maintaining a significant market share.
“The liquidity model that worked in bull markets isn’t suited for a quieter, risk-averse climate. However, this doesn’t signify the end of NFT lending; rather, it indicates a shift in focus,” Gherghelas affirmed.
“Platforms are diversifying, application cases are shifting, and collateral preferences are evolving. If the next wave prioritizes utility, culture, and improved design, NFT lending may well discover its second breath—one that’s sustainable in the long run.”
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