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What happened?
The NFT lending market has experienced a dramatic decline in volume and user activity, dropping from nearly $1 billion in monthly volume to just over $50 million by May 2025. This marks a 97% decrease from its peak in January 2024. The reduction is largely attributed to the drying up of speculative incentives that initially drove the market’s growth.
Who does this affect?
This significant downturn impacts NFT holders, lenders, and platforms operating within the NFT ecosystem. Many NFT lending protocols have become inactive due to reduced activity, affecting developers, borrowers, and investors relying on these platforms. Additionally, speculators and collectors who used NFTs as collateral are seeing less liquidity in their assets.
Why does this matter?
The collapse in the NFT lending market raises concerns about its long-term viability and impacts the broader digital asset market. With the decline of speculative activities, there’s a shift towards more stable and utility-driven use cases, which could attract institutional interest if properly developed. However, the market needs further maturation and integration of real-world asset tokenization to stabilize and grow.
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