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What movies were filmed at Universal Studios Hollywood?
Liquidators can repay a portion of the borrower’s debt and, in return, claim the borrower’s NFT collateral. When a borrower's position becomes undercollateralized, the liquidation process begins. For each loan market, liquidation can be triggered when Borrow Limit Used exceeds 100%. Each collateral is tracked by a unique collateralHash which is derived from the loan receipt details. Then, face action head-on in heart-pounding rides, shows and attractions – including Fast and Furious – Supercharged - that put you inside some of the world’s most popular TV shows and movies.
Blur has replaced listing points with lending points for the collections supported by Blend to incentivize liquidity for potential borrowers. It remains to be seen what impacts introducing such leverage to these collections will have on their respective floor prices in the long term, but it could lead to more volatile price movements as traders lever up during price appreciation. As Punk9059 highlights, the announcement of MAYC, BAYC, and DeGods support for Blend resulted in the floor price appreciation for the subsequent collections. Specifically, while BNPL allows smaller traders to enter a more expensive collection with less capital upfront, many who choose this option probably do not have enough ETH to repay the loan if the lender calls.
To protect users, Paddle uses a partial liquidation model. At Paddle, anyone can participate in liquidations directly through the frontend to help maintain the stability and integrity of the platform. The callback follows the ERC-165 interface detection standard, ensuring the Pool can properly receive and handle the liquidation proceeds.
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However, Blur has announced that borrowers can now repay the borrowed funds in increments to extend the loan duration. Previously, the borrower must repay the full borrowed amount when the lender calls within the period. Alternatively, the lender can also skip the auction by submitting another lender's offer to the vault to exit their position if a compatible one is available. This allows the market to determine the loan terms (floating rates) and, subsequently, the underlying value of a collection. NFT holders of these collections can borrow ETH against their NFTs at a fixed rate and no expiries, meaning borrowers can repay at any time and are only subject to liquidation by market-determined interest rates.
External Collateral Liquidator
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Example Liquidation Flow
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- Managing risk in NFT DeFi is complex due to the inherent illiquidity and price volatility of unique assets.
- Future protocols are working on secure bridging mechanisms to allow NFTs to be used as collateral or staked across multiple chains, dramatically increasing their potential market and liquidity pool size.
- A central question remains ∞ how can protocols guarantee the formal verification of these complex, evolving contracts to protect billions in collateral?
- Liquidators can repay a portion of the borrower’s debt and, in return, claim the borrower’s NFT collateral.
Although, introducing leverage into a volatile asset class could lead to heavy losses taken on by uninformed retail borrowers (losing their prized NFT or ETH collateral) if the lender decides to exit their position and no new lender is willing to step in. As an example, check out Tyler's short-term trade using BNPL, where he bought an Azuki for 2.2 ETH when the collection's floor price was 15.9 ETH and sold the NFT overnight for 16.9 ETH. As seen in the chart above, the Dutch auction starts at a 0% interest rate and increases until a new lender steps in to take over the loan. The refinancing auction is a Dutch auction process to extend the loan to a new lender who is willing to repay the full amount to the original lender to take over the loan for a higher interest rate. With Blend, lenders can exit their position at any time by triggering a refinancing auction for the borrower to find a new lender at a new rate, which lowers the risk for lenders and creates a much more efficient market (lenders can offer better rates).
Collateral State Flow
Blend incorporates two different products, namely lending and borrowing, and Buy Now, Pay Later (BNPL). Their bidding and listing points system for BLUR airdrops to incentivize liquidity has also contributed significantly to the marketplace's rapid success. Let’s say Alice uses her NFTs to borrow from the Steady Teddys / BERA lending market.
This integration allows NFT holders to retain ownership rights and potential long-term capital appreciation while simultaneously earning short-term liquidity or token rewards. This shift is achieved by leveraging the smart contract functionality of the underlying blockchain, enabling NFTs to be locked, lent, or collateralized to generate continuous cash flow for the holder without requiring the asset to be sold. So, unless the owner wants the NFT's specific IP, there is simply no reason to clear the debt.
These protocols use mechanisms like floor price or community-driven appraisals to establish a loan-to-value (LTV) ratio, thus unlocking the asset’s dormant capital. The majority of the liquidated NFTs have no bids because the protocol requires bids to be at least 95% of the NFT collection's floor price and above the borrower's betory casino review debt, leaving only a 5% upside for the bidder. According to research, most loans for BAYC-backed debts were obtained at around 125ETH floor price for BAYC and 30E floor price for MAYC.
If the borrower fails to clear the debts + interest within 48 hours, the NFT is auctioned off to the highest bidder. By depositing your NFT as collateral, the owner can borrow and repay ETH at any time. The same ETH can also be deployed across collections to maximize lending points. This would also help bootstrap the launch of Blend, as more liquidity leads to better offers. With this risk that the borrower has to bear in mind, BNPL should primarily be used for short-term flips.
However, it remains to be seen how the introduction of leverage will impact the floor prices of supported collections in the medium to long term, especially during periods of high volatility and sudden downwards in price action, where many traders may get liquidated if not properly managing their risk. Blend's design considerations improve the lending experience for both borrowers and lenders, as well as leveraging its existing marketplace and integration of lending points, which have resulted in the rapid growth and adoption of the protocol. A lender could provide multiple loan offers with different parameters on the same collection and earn lending points for each.
The potential for a bug in a dynamic metadata update to compromise the entire collateral mechanism represents a systemic risk that requires continuous technical diligence. A central question remains ∞ how can protocols guarantee the formal verification of these complex, evolving contracts to protect billions in collateral? This aggregation of liquidity is essential for supporting a high volume of instant, automated lending transactions. This shift creates a more robust mechanism for risk assessment, potentially allowing for higher LTV ratios because the collateral’s value is less reliant on speculative market sentiment and more on verifiable, on-chain or off-chain data feeds.
Fixed-term lending goes hand-in-hand with the protocol's oracle-free approach to reduce complexity, as using oracles to determine the assets' values (either the collection's average or floor price), interest rates, or liquidation parameters, would incur additional risks such as faulty oracle readings. However, there are some distinctions in the implementation that Blur has taken that differentiate their lending product from other peer-to-peer NFT lending protocols, including zero protocol fees for both borrowers and lenders, no oracle dependencies, no loan expiries, and refinancing auctions. Blend has taken the peer-to-peer approach to its design due to inefficiencies of on-chain governance and centralization issues that liquidity pool-based protocols inherit from attempting to manage lender deposits. Future protocols are working on secure bridging mechanisms to allow NFTs to be used as collateral or staked across multiple chains, dramatically increasing their potential market and liquidity pool size. This process is facilitated by specialized peer-to-peer (P2P) or peer-to-pool (P2Pool) lending protocols.
The emergence of Dynamic NFTs (dNFTs) is set to revolutionize how digital assets function as collateral. This evolution addresses the current market’s primary hurdles ∞ unpredictable valuation and low liquidity. The future of NFT passive income moves beyond static collateral toward dynamic, programmable assets and the integration of stable, tokenized real-world value. Focus on pools with lower volatility pairs; understand the specific AMM design. The following table summarizes the primary risks for the two main passive income strategies. NFT collateralization allows the holder to borrow fungible cryptocurrency (like ETH or stablecoins) against the value of their NFT without selling the asset.
- For example, if the floor is 10 ETH, the lender can make an offer with 9 ETH max borrow + 90% APY, and another offer with 5 ETH max borrow + 20% APY, earning points for both offers.
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- If collateral has a liquidation threshold of 90%, the loan will be liquidated when the debt value is worth 90% of the collateral value.
- Let’s say Alice uses her NFTs to borrow from the Steady Teddys / BERA lending market.
- When the market retraces and borrowers are unable to repay, it could escalate the selling pressure and lead to a liquidation cascade as lenders look for liquidity.
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Because the borrower's position is essentially a put option for the NFT by nature, this forces the lender to carefully and tightly manage their loan offer by setting short expiration dates, high-interest rates, low LTV, or a combination of these parameters. However, because Blend's design comprises continuous/perpetual loans by default, the loan is live until the lender triggers a refinancing auction and the loan defaults or the borrower satisfies the amount owed. Hence, they can easily match borrowers with lenders and the abundance of liquidity on their platform via the point system. Check out our previous NFT lending landscape report, where we covered some of the top NFT lending protocols.