A new report released by digital asset analytics firm eBit Labs revealed that non-fungible token (NFT) lending had hit a record high in January 2023, marking a return to figures not seen since the sector’s previous all-time high in May 2022.
The report analyzed on-chain data of loans backed by the Bored Ape Yacht Club (BAYC). It examined various parameters, including loan price, duration, liquidation value, and marketplace dominance.
News Sentiment: Positive
- eBit labs report analyzes NFT lending backed by Bored Ape Yacht Club
- BendDao faces competition as X2Y2 enters the market with higher advance rates
- January surge in NFT lending driven by market exuberance and Dookey Dash News
- The majority of NFT loans are repaid or liquidated within a day, says eBit labs report
eBit labs report analyzes NFT lending backed by Bored Ape Yacht Club
eBit Labs discovered that the amount borrowed in January 2023 had returned to peak levels not seen since May 2022. For the first time in over nine months, weekly loan volume totaled more than 6,000 ETH in the first week of January, with the total borrowed throughout the month reaching more than 18,000 ETH (equivalent to $30,516,660 at press time).
The lending industry gained widespread attention in 2022 as the declining floor price of BAYC sparked market pressure, leading to heightened concerns about potential liquidation and ultimately resulting in a liquidity crisis.
BendDao faces competition as X2Y2 enters the market with higher advance rates
Competition among platforms has become more intense in recent months. Since its launch, BendDao has maintained a consistent maximum advance rate of 40%, significantly lower than the advanced rates of up to 80% offered by other peer-to-peer NFTfi platforms.
However, in September 2022, the entry of X2Y2 into the market disrupted this status quo by offering advance rates exceeding 100%. As a result, BendDao faced intense competition and user attrition, raising its advance rates to 60% during the winter holiday season.
January surge in NFT lending driven by market exuberance and Dookey Dash News
According to the report, several factors propelled the surge in NFT lending in January 2023. Market vitality and the Yuga Labs’ Dookey Dash News encouraged users to ramp up Yuga-related lending activity. The bulk of loans issued across the three primary lending platforms was against Bored Apes, with short-term loan balances for BAYC reaching record highs in January 2023.
The majority of NFT loans are repaid or liquidated within a day, says eBit labs report
The data indicates that most loans are either repaid or liquidated within a single day, with longer-term loans constituting only a tiny portion of the total. This trend suggests that many borrowers may utilize these loans to address immediate liquidity requirements rather than as a hedge against market-value fluctuations.
A lull in activity between the 6th and 14th hour (UTC) on weekdays, outside of the general US waking hours, suggests that a significant portion of the action occurs within the United States.
In conclusion, the NFT lending market has experienced a resurgence, with January 2023 recording new highs in borrowing and lending activities. With the intense competition among platforms, it remains to be seen how this market will continue to evolve in the coming months.