NFT lending continues to moon as over 18k ETH borrowed in January

according to the new report NFT lending hit a record month in January, returning to numbers not seen since the sector’s all-time high in May 2022, according to digital asset analytics firm eBit labs.

This report uses on-chain data for loans backed by the Bored Ape Yacht Club (BAYC) and surveys BAYC according to loan price, term, liquidation value, and market dominance.

Additionally, eBit labs found that January 2023 borrowings have returned to a peak not seen since May 2022. For the first time in over nine months, he surpassed 6,000 ETH in weekly loans in the first week of January. Additionally, the total amount borrowed during January exceeded 18,000 ETH, reaching $30,516,660 at the time of writing.

Lending platform volume
Lending Platform Volume (Source: eBitlabs)

In mid-2022, the lending industry received widespread attention as a fall in BAYC’s floor price triggered market pressures, raising concerns about potential liquidations and ultimately leading to a liquidity crisis.

Clearing vs Series Floor
Clearing and Series Floors (Source: eBitLabs)

Competition between platforms intensifies

Since its launch, BendDao has consistently maintained a maximum advance rate of 40%, well below the 80% maximum advance rate offered by other peer-to-peer NFTfi platforms.

However, this status quo has collapsed with the entry of X2Y2 into the market in September 2022, offering over 100% prepayment rates. As a result, BendDao faced stiff competition and a declining user base, pushing his advance rate to 60% to stay competitive. This adjustment was made during the winter holidays.

Progression rate graph showing platform distribution
Progression chart showing platform distribution (Source: eBitLabs)

January 2023 peak

The report said the surge in NFT lending in January was driven by several factors. One of the main factors was the market vibrancy and his Dookey Dash News on Yuga Labs, which allowed users to step up his Yuga-related lending activities. BAYC’s short-term loan balance hit a record high in January 2023, with the majority of loans issued across the three major lending platforms being to Bored Apes, according to the study.

BAYC Borrowing with ETH
BAYC Borrowing in ETH (Source: eBitLabs)


Data show that the vast majority of loans are paid or cleared within a day, with long-term loans making up a much smaller percentage of the total. This trend suggests that potentially many borrowers are using these loans to meet their immediate liquidity requirements rather than as a hedge against market price fluctuations.

loan period
Loan term (source eBitLabs)

The quietness of activity between 6am and 2pm UTC on weekdays (outside the general wake-up time in the US) suggests that a significant portion of the activity is occurring within the US .

when borrowing occurs
In the event of borrowing (source: eBitLabs)

Overall, the report concludes:

“The availability of NFT lending fulfills a valuable market need and drives the continued development and refinement of the entire NFT ecosystem. , it is clear that these loans can meet short-term and long-term liquidity needs and provide a valuable market value hedge.”

Posted In: DeFi, Lending, NFT

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