Blur nonfungible tokens (NFT) marketplace, in collaboration with venture capital firm Paradigm recently launched Blend, a protocol for peer-to-peer (P2P) perpetual lending that supports NFT collateral.
Blend lacks Oracle dependencies and expirations, enabling borrowing positions to remain open indefinitely until they are closed. Developers also assert that no fees would be collected from borrowers and lenders:
“Blend matches users who want to borrow against their nonfungible collateral with whatever lender is willing to offer the most competitive rate, using a sophisticated off-chain offer protocol.”
Per its design, Blend automatically “rolls a borrowing position for as long as some lender is willing to lend that amount against the collateral.” No on-chain transactions are necessary unless one party decides to abandon the position or the interest rate changes.
“In Blend, an NFT may be liquidated whenever a lender triggers a refinancing auction and nobody is willing to take over the debt at any interest rate.”
As part of a protocol for perpetual lending, debtors and lenders extend the loan maturity date by a predetermined amount of time. If a lender wishes to terminate a loan against the borrower’s wishes, an interest-rate “Dutch auction” is conducted for refinancing if the borrower has not repaid the debt at its expiration. The auction begins with a 0% refinance rate that gradually increases.
However, developers explained that loan repayment is possible anytime on Blend. “If a borrower wants to change the amount they have borrowed or get a better interest rate, they can atomically take out a new loan against the collateral and use the new principal to repay the old loan,” they wrote.
Launched in the third quarter of 2022, Blur began rewarding users on February 14 with “care packages” redeemable for BLUR tokens to increase trading activity. OpenSea has been surpassed by the platform in terms of trading volume.
