Non-Fungible Token Lending – A Unique Financial Model for the Non-Fungible Token Market in 2024

In the strong development wave of Web3 and DeFi, NFT Lending is gradually becoming an important piece for the development of Non-Fungible Tokens, opening up capital access opportunities for millions of people. Although still new compared to traditional Lending forms in Crypto, the NFT Lending model has proven great potential in boosting liquidity and market capitalization growth for the Non-Fungible Token market.

So what is NFT Lending? How does it work? What are the current NFT lending models and which are the notable projects? Let's explore the details with Allinstation in the article below!

Non-Fungible Token Lending not only helps optimize Non-Fungible Token assets but also promotes application, liquidity, and financial investment in the Web3 ecosystem.

Non-Fungible Token Lending Ecosystem: Notable Projects

Non-Fungible Token Lending is an important part of the Non-Fungible Token market, but this ecosystem is still quite young compared to other pieces in the digital financial space. Nevertheless, this financial segment has seen significant growth and maintained Total Value Locked (TVL) at around 20%-30% of the total Non-Fungible Token market capitalization. According to predictions from defillama, if Non-Fungible Token lending continues to develop at its current growth rate, by 2025, the TVL of this field could account for 25%-40% of the total Non-Fungible Token market capitalization.

One of the pioneering projects in Non-Fungible Token Lending is NFTfi, launched in 2022. NFTfi quickly became an important platform in the Non-Fungible Token lending space, and by 2023, the project had reached a total lending capital of up to 450 million USD. Based on data from dune analytics, NFTfi maintained a stable trading volume from April 2022, ranging between 10,000 - 18,000 ETH.

BendDAO is one of the first projects to adopt the Peer-to-Protocol Lending model. Launching its mainnet in March 2022, BendDAO focused on allowing users to mortgage Blue Chip Non-Fungible Tokens. Thanks to this strategy, BendDAO reached a lending amount of up to 62 million USD in April 2022, proving the success of this model in attracting users and creating lending opportunities.

JPEG'd is one of the few protocols adopting the Collateralized Debt Position (CDP) model in the Non-Fungible Token Lending ecosystem. JPEG'd allows users to mortgage Non-Fungible Tokens to borrow up to 32% of the Non-Fungible Token's value with an annual interest rate of only 2%, lower than most other protocols (usually ranging from 14-20%). Additionally, the transaction fee when borrowing at JPEG'd is 0.5%. Although it only allows mortgaging Blue Chip Non-Fungible Tokens, JPEG'd still attracts many users due to its attractive lending terms.

ParaSpace is another prominent Non-Fungible Token Lending project, currently ranking second in the list of Non-Fungible Token lending platforms, just after Blend. Launched in December 2022, ParaSpace has overtaken many competitors and within 6 months has reached a total lending value of over 300 million USD. The rapid development of ParaSpace shows its great potential to become a key platform in the Non-Fungible Token Lending ecosystem.

Overall, the Non-Fungible Token Lending ecosystem is in a stage of strong development with the emergence of many breakthrough projects and great potential. From platforms like NFTfi, BendDAO, JPEG'd, to ParaSpace, new financial models and solutions are contributing to expanding opportunities for users in the Non-Fungible Token space, while creating a solid foundation for sustainable growth in the future.

Summary

Non-Fungible Token Lending is a trend reshaping how we view digital assets. From a Non-Fungible Token market previously seen as "illiquid", users can now hold Non-Fungible Tokens while still borrowing capital to continue investing.

If you own Non-Fungible Tokens, consider exploring Non-Fungible Token Lending as a flexible financial solution. This article is for informational purposes only and is not investment advice. Newcomers should be cautious and think carefully before making any investment decisions!