Blur New Lending Protocol Blend Depth Analysis

Recently, a new P2P NFT lending protocol called Blend has attracted widespread attention in the industry. This protocol not only offers innovative lending features but also supports services for purchasing NFTs through loans. This article will delve into the core characteristics, product advantages, and implementation methods of Blend.

Core Features of Blend

The Blend protocol has the following main features:

1. Peer-to-peer perpetual lending, no fixed maturity date, no need to rely on oracle.
2. The lender can independently set the loan amount and annualized yield, and publish the quotation.
3. The borrower can choose from the existing quotes.
4. If the lender needs to exit, the borrower must repay or re-borrow within 30 hours, otherwise they will face liquidation.
5. The borrower may repay the loan at any time.
6. Support "Buy Now, Pay Later" model, which means down payment plus loan to purchase NFT.

Product Advantage Analysis

The core advantage of Blend lies in unifying non-essential elements, reducing system complexity, and enabling flexible migration of lending relationships within the system. Pricing risk and return through market games maximizes user satisfaction.

Compared to the traditional peer-to-peer model, Blend unifies the term among the three key elements of borrowing (collateral ratio, interest rate, term) into a perpetual flexible model, greatly improving the liquidity issues for lenders. At the same time, Blend has unified the handling of lender exit and liquidation, essentially meaning that liquidation is the result of no one willing to take over the project.

Although Blend has fixed terms such as collateralization ratios and interest rates on the surface, its highly flexible exit mechanism allows the effective terms to basically follow the market average level. If the terms are significantly below the market level, the borrower has the incentive to repay and borrow other more favorable offers; if the terms are significantly better than the market level, the lender has the incentive to exit and issue new offers to obtain higher returns.

For borrowers, Blend achieves complete flexibility in loan duration through the perpetual and anytime repayment setup. For lenders, the protocol not only offers the customization advantages of a peer-to-peer model but also enjoys liquidity advantages close to a peer-to-pool model, while allowing them to set their own risk control standards for flexible exit.

Loan Purchase of NFT

The loan purchase NFT feature launched by Blend is similar to a home mortgage. Users can initiate a collateral loan while purchasing an NFT, obtaining ownership of the NFT by only paying a down payment, which improves capital efficiency. The integration of this feature helps bring a large number of new users to Blend, promoting its rapid growth, and also reflects the synergy that ecosystem integration can bring.

Other Details

According to the design document, when the lender exits, a Dutch auction will be initiated, with the interest rate gradually increasing from 0% to 1000%. New lenders can place bids at any time, and if the interest rate reaches 1000% with no one taking over, the borrower will be liquidated, and the mortgaged NFT will be transferred to the current lender.

However, in practice, borrowers need to repay or refinance. This may be because the current system considers both the loan amount and the interest rate as variables, rather than just one factor, the interest rate. The essential goal of both methods is the same: to enable borrowers to obtain optimal new terms.

It is worth noting that Blend has not yet fully utilized the role of the $Blur token. $Blur holders have governance rights to set various parameters, as well as the power to turn on the fee switch after six months, but the specific implementation details remain uncertain.

Summary

Blend has achieved a significant improvement in efficiency by unifying non-essential elements based on the traditional peer-to-peer lending model. At the same time, the deep integration with the Blur trading module provides users with a higher quality experience. Although relatively ordinary in terms of token empowerment, Blend's innovations at the product level undoubtedly bring new possibilities to the NFT lending market.