Binance NFT marketplace introduces lending feature collateralized by blue-chip NFTs

Binance NFT marketplace introduces lending feature collateralized by blue-chip NFTs

Binance NFT marketplace has a new lending feature that utilizes NFTs as collateral, allowing users to borrow ether(ETH) with blue-chip NFTs.

Users can borrow with NFTs

Binance has forayed into the NFT lending space. Through its Binance NFT marketplace, users can borrow ether(ETH) against “blue chip” NFTs like Mutant Ape Yacht Club(MAYC), Bored Ape Yacht Club (BAYC), Doodles, and Azuki. 

The exchange has set the NFT loan interest at 7.91% p.a and loan to value ratio ranging from 40% to 60%. Notably, there will be no gas fees or a charge on ethereum transaction fees.

Binance also mentioned that the new feature would see new benefits of decentralized finance to the community. Mayur Kamat, head of products at Binance, also added that the NFT loans are a new form of liquidity for NFT holders who can participate in the market without selling their NFTs.

Exchanges join the lending space despite lower activity

The Binance lending feature went live a few weeks after Blur introduced Blend, its lending protocol. The protocol allows borrowers to make smaller down payments to access blue-chip assets. In addition, users can make specific terms with lenders, such as the interest rate and acceptable collateral.

In just 24 hours of the launch, Blend had a total volume of 6,406 ETH. Users expressed interest mostly in Cryptopunks, Milady NFT collections, and Azuki. According to Blur, Blend is like purchasing a house, needing investors to pay for an asset and the remaining debt through mortgage payments. 

The NFT market performance slowed down this year as daily trading volumes went down considerably compared to earlier highs based on a Galaxy Digital report. In addition, the report noted that the top 1% of Blur accounts for 64% of the volume on the platform compared to only 20% on OpenSea. 

However, the report showed that general NFT activity is still higher than the 1-year low of November 2022.

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