NFT Lending Platform Blend Sparks Concerns Over Ecosystem Liquidity

05/06 03:14

According to Coindesk, Blend, the name of NFT marketplace Blur’s new lending platform, allows traders to lease NFTs to bolster liquidity. However, concerns have been raised about its impact on broader NFT markets. Although it appears that Blend may be helping nudge NFT markets upward, it may not be a product that every amateur trader should be eager to “ape” into. The danger is that NFT lending platforms such as Blur allow collectors to purchase tokens with funds they don’t have, creating liquidity risks down the line when collection floors or cryptocurrency prices crumble. Twitter user Carl_m101, founder of NFT collection Sky Scooters, shared a thread explaining some of the risks of Blend, where after a large price floor jump, a “margin call” event might follow where traders sell off their NFTs and, as a result, end up tanking the market. Not only might it hurt the market, but it also may hurt the native BLUR token. Pseudonymous Twitter user Bamboo, strategic lead at NFT trader’s club Invite Only Lounge, said in a Twitter thread that as the NFT market becomes impacted by lenders on Blend, it will hurt people’s BLUR holdings as well as negatively impact the greater crypto ecosystem.
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