What happened?
The NFT lending market has dramatically declined, plummeting by 97% from its peak in January 2024. This downturn has seen monthly volumes drop from almost $1 billion to just over $50 million by May 2025, with user activity, loan sizes, and confidence all significantly reduced. A major shift in the market saw GONDI overtaking Blend as the leading platform, capitalizing on the demand for more stable, long-term lending options.
Who does this affect?
This collapse affects borrowers and lenders in the NFT space who previously relied on these loans for liquidity. The massive fall in borrowers (down 90%) and lenders (down 78%) indicates a dwindling interest or ability to engage with NFT lending. It also impacts platforms like Blend, which have lost market dominance, and affects artists and collectors who utilized these loans for financial flexibility.
Why does this matter?
The sharp decline in NFT lending signifies a broader shift in market dynamics, affecting the digital asset market’s liquidity and innovation potential. This contraction highlights the need for real-world applications and utility-driven innovations to sustain the market beyond purely speculative endeavors. If new models focused on utility and sustainable design emerge, the NFT lending market could potentially stabilize and even grow, impacting the overall health of the NFT and wider crypto markets.