Blur, the foremost non-fungible token (NFT) marketplace based on trading volume, has unveiled its latest innovation, ‘Blend,’ a perpetual, peer-to-peer lending protocol centered around NFT assets. This development emerges as the NFT-backed loan market flourishes, having recently surpassed $1 billion in total loan value across various protocols.

Blend, an abbreviation for “Blur Lending,” enables NFT collectors to leverage their existing assets for loans while allowing liquidity providers to accrue interest through lending Ethereum (ETH), with the NFTs serving as collateral.

Distinct from some existing lending protocols, Blend does not impose specific durations for loan repayment. Instead, it operates on a perpetual basis, with loans accruing interest until they are repaid or until the lender instigates a refinancing auction. This mechanism offers the potential for another lender to assume the loan, or alternatively, a liquidation auction can be initiated for the NFT collateral.

Furthermore, Blend does not depend on oracles, or external off-chain data sources. Consequently, Blend loans do not consider NFT pricing data across marketplaces, an approach adopted by some lending protocols, such as BendDAO, to determine liquidation criteria.

In a series of tweets, Blur stated that Blend “enables 10x higher yield opportunities than current DeFi protocols and unlocks greater liquidity for NFTs.” At present, Blend does not impose fees on borrowers or lenders. However, after a period of 180 days, holders of BLUR tokens can vote to implement fees.

Blur also hinted at the imminent launch of two significant new products built around Blend, with comprehensive details about the protocol’s functionality provided in the official white paper.

The development of the Blend protocol was a collaborative effort involving Dan Robinson and the pseudonymous Transmissions11, both associated with Paradigm, a cryptocurrency venture capital firm. Paradigm led Blur’s seed funding round, which raised $11 million in March 2022.

Blur was launched in the fall of 2021 as a potential competitor to OpenSea, the NFT marketplace leader at the time, with a strategy to offer token rewards as an incentive to traders. Following Blur’s initial token airdrop, the platform overtook OpenSea in terms of total trading volume in February, with high-volume traders rapidly flipping assets to acquire BLUR token allocations.

Despite a decrease in trading hype since February, Blur continues to dominate in terms of trading volume. Over the past week, Blur accounted for approximately 58% of NFT trading volume across marketplaces, according to data from Dune, amounting to nearly $98.5 million in trades. However, OpenSea still leads in terms of total trades, with a nearly 47% share via almost 80,000 trades.

The NFT lending market has recently exceeded the $1 billion threshold and continues to expand. Leading the way is lending protocol NFTfi, with over $406 million in loans to date. BendDAO ranks second, with approximately $308 million in loans, according to data from Dune.