Blur recently launched Blend, a new peer-to-peer NFT lending platform that allows traders to lease NFTs to enhance liquidity.

However, some industry experts have warned that NFT lending platforms like Blend could create liquidity risks by allowing collectors to purchase tokens with funds they do not own. This could lead to a liquidity crisis if the reserve price of collectibles or cryptocurrency prices plummets.

Carl_m101, founder of NFT series Sky Scooters, expressed concern that margin calls could occur after a surge in reserve prices, causing traders to sell their NFTs, disrupting the market.

There may be many inexperienced buyers who have entered into projects they could not afford before, or purchased more projects through PFP loans. On the other hand, native BLUR tokens are also potentially harmful.

Bamboo, director of strategy at Invite Only Lounge, an NFT trader club, and an anonymous Twitter user warned in a tweet that the NFT market is being influenced by Blend lenders.

This could damage people’s BLUR holdings and negatively impact the larger crypto ecosystem.

Industry analysts have urged caution with NFT lending platforms as they are still relatively new and untested.

There are concerns that these platforms could fuel a bubble in the NFT market and lead to a crash similar to what happened in the cryptocurrency market in 2017.

According to a report from Messari, the NFT market has seen a significant increase in transaction volume, with sales totaling $10.7 billion in the first quarter of 2022.

The report also noted that the NFT market is still in its early stages and has plenty of room to grow.

As the NFT market continues to evolve, it is important for traders and collectors to exercise caution and conduct thorough research before investing in any platform.

The potential risks and benefits of an NFT lending platform like Blend need to be carefully evaluated to ensure the market remains stable and sustainable.

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Filed under: Bitcoin - @ May 6, 2023 3:52 pm