On May 1, 2023, Blur, an NFT trading platform, officially announced the launch of Blur Lending, abbreviated as Blend. Blend is a peer-to-peer lending protocol that supports any collateral, including NFTs. Since its launch in the first week, the total loan volume (67,180,783) has increased by 270.54% compared to the previous week (18,130,120). Blend's weekly loan volume (illustrated in green) has shown strong performance, with a weekly loan volume (50,103,252) approximately 2.93 times higher than the combined weekly loan volume of other centralized platforms (17,077,531).

1. Fundamental Analysis of Blend

Blend is a collaboration between Dan Robinson and Transmissions11. Dan Robinson is one of the creators of Uniswap V3, while Transmissions11 is a researcher at Paradigm and a key contributor to Seaport. Blend is characterized by the following four main features:

1. Peer-to-peer mechanism: Blend operates on a peer-to-peer model where each loan is individually matched between lenders and borrowers.

2. No oracle dependency: By utilizing a sophisticated offline quoting system, Blend does not rely on oracles. This enhances the protocol's internal consistency and security.

3. No expiration date: By default, Blend loans have a fixed interest rate and never expire. Borrowers have the flexibility to repay the loan at any time, which is a significant improvement over traditional peer-to-peer models.

4. Liquidation capability: In the event of a failed auction, the borrower undergoes liquidation, and the collateral is transferred to the lender.

Blend has introduced the following two mechanisms:

1. Term Loans (Fixed-Term Loans):

Lenders sign an offline quote to lend a specific amount of ETH with a designated interest rate and maturity date for any specified series of NFTs. They make this quote publicly available, for example, by posting it to an off-chain quote repository. Borrowers can browse the off-chain quote repository and select a suitable offer. The borrower then creates an on-chain transaction to accept the lender's proposal, placing their NFTs in a custodial vault and transferring the principal from the lender. Prior to the maturity date, the borrower can repay the lender (repayment = loan amount + interest) to retrieve their collateral. If the loan is not repaid by the expiration date, the collateral will be liquidated and transferred to the lender. It's worth noting that if the value of the NFT has dropped below the repayment amount, the borrower has the option not to repay the loan.

2. Refinancing Auction:

Blend offers a competitive auction process called a Dutch auction for refinancing instead of simply providing collateral to lenders. A Dutch auction is a special type of auction where the seller gradually lowers the price until a buyer accepts the bid and a transaction is completed. This auction process allows borrowers to extend their loans by competing for interest rates.

Based on the provided information, it can be observed that in the case of a term loan where the borrower fails to repay the debt, a refinancing auction is initiated with an initial interest rate of 0%. This interest rate gradually increases during the auction process. In this auction, new lenders can take over the loan by submitting their bids online, determining an appropriate interest rate. The new lender is required to make a full repayment to the previous lender. The auction determines the new interest rate. It's important to note that lenders can initiate refinancing at any time, which may not be favorable for the borrowers in this design.

2. Data Analysis

2.1 Total Value Locked (TVL)

On May 1st, the day Blend was launched, the Total Value Locked (TVL) reached $5.21 million. As of May 17th, the TVL has increased to $22.914 million, representing a significant growth of 339.8%.

2.2 Daily Loan Volume

As of May 15th, Blend has lent a total of 81,661 ETH across 4,667 loans. The number of unique borrowers is 787, while the number of lenders is 1,155. Here is the breakdown of Blend's daily loan volume and its cumulative changes:

As shown in the graph, Blend witnessed 499 loan transactions on its first day of launch. Although there was a slight decline in the following period, the overall trend remained stable. As of May 15th, the average daily loan volume stands at 418.9.

2.3 NFT Trading Data

Blend has currently listed six NFT series, namely Wrapped Cryptopunks, Azuki, Milady, DeGods, MutantApeYachtClub, and Bored Ape Yacht Club. Among them, DeGods was launched on May 8th, while MutantApeYachtClub and Bored Ape Yacht Club were launched on May 15th. ChainAegis provides the following analysis on LTV (Loan-to-Value), APY, daily trading volume, and daily refinancing quantity for each series:

(1) Evaluation of Loan Risk Indicator - LTV

Loan-to-Value (LTV) is the ratio of the loan amount to the value of the collateral. Taking housing loans as an example, if the value of a house is $10 million and the loan amount is $7 million, the LTV ratio would be 70%. The LTV ratio for different collateral loans varies depending on the bank's policies and the stability of the asset prices.

The following depicts the daily changes in Loan-to-Value (LTV) for each specific NFT series on Blend. In Blend, LTV is calculated as the loan amount divided by the collateral value (collateral value = average floor price).

On the second day of launch, Milady had the highest LTV value, reaching 84.36%. Wrapped Cryptopunks surpassed Milady from May 2nd to 9th, taking the top position, but then experienced a decline. Milady and DeGods have relatively lower LTV values. Previously, Blur's official announcement stated that there would be a 2x lending bonus for the Cryptopunks, Azuki, and Milady NFT series. It was reported that these bonuses would be related to the future Season 2 airdrop, where having more lending points would increase the chance of receiving more $BLUR airdrop tokens.

（2）APY

The Annual Percentage Yield (APY) represents the amount earned from compound interest (interest + principal) over the course of a year. According to Dune data, on the first day of their respective launches, DeGods, MutantApeYachtClub, and Bored Ape Yacht Club had high APY values of 479%, 230%, and 260% respectively. However, these values rapidly decreased after the launch. As of May 17th, the APY for MutantApeYachtClub, DeGods, Azuki, Milady, Bored Ape Yacht Club, and Wrapped Cryptopunks were 39%, 19%, 7%, 30%, 8%, and 58% respectively.

(3) Daily Trading Volume

As the APY decreased, the trading volume gradually increased. Traders can acquire more lending points, which in turn increases the likelihood of receiving the $BLUR airdrop in the future.

The graph represents the daily trading volume of different NFT series on Blend. As of May 17th, Azuki (depicted in orange) has been the dominant series in terms of trading volume, accumulating 54,100 ETH, which accounts for 45.81% of the total trading volume. Wrapped Cryptopunks (depicted in dark blue) follows with an accumulated trading volume of 28,200 ETH, representing 23.90% of the total volume. DeGods has maintained relative stability since its launch, with an average daily trading volume of 801.3 ETH. The daily trading volumes of MutantApeYachtClub and Bored Ape Yacht Club have been consistently increasing, with respective growth rates of 13.5% and 191.3% since their first day of listing.

(4) Daily Refinancing

The following depicts the daily refinancing situation on Blend. As of May 17th, the total accumulated refinancing quantity on Blend reached 2,793. On May 10th, there was a new record high in daily refinancing quantity, with 320 transactions.

From the perspective of NFT series categories, the refinancing on Blend is primarily dominated by Milady (depicted in gray) and Azuki (depicted in orange). The daily refinancing quantities of these two series are relatively close, accounting for 43.91% and 41.60% of the total respectively. Despite being launched more recently, MutantApeYachtClub has also shown some level of performance in terms of refinancing.

2.4 Borrower and Lender Count

The following depicts the daily count of borrowers and lenders on Blend. Overall, the number of borrowers slightly exceeds the number of lenders. As of May 15th, the total count of borrowers was 2,572, while the number of lenders was 2,112.

2.5 Top 10 Lenders

The following presents the address information of the top 10 lenders ranked by the total loan amount. As of May 15th, the address 0x048...13a0 had accumulated a total loan amount of 3,421.17 ETH, ranking first. The address 0x020...5872 ranked second with a total loan amount of 2,460.86 ETH. It is worth mentioning that this address belongs to Huang Licheng, who previously claimed to be entering the NFT space (Ethereum domain: machibigbrother.eth).

2.6 Top 10 Borrowers

The following presents the address information of the top 10 borrowers ranked by the total borrowed amount. As of May 15th, the address 0x97c...6a20 had accumulated a total borrowed amount of 3,833.73 ETH, ranking first. The address 0x023...379f ranked second with a total borrowed amount of 1,710 ETH.

Based on the information of the top 10 lenders and borrowers, it can be observed that lenders have a larger number of loans and a higher total loan amount. The top 6 lender addresses have loan amounts exceeding 1,000 ETH. On the other hand, borrowers have fewer loan transactions and a smaller total borrowed amount. Only the top 3 borrower addresses have borrowed amounts exceeding 1,000 ETH.

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