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.
In mid-2022, the lending industry received widespread attention as a fall in BAYC floor prices triggered market pressures, raising concerns about potential liquidations and ultimately leading to a liquidity crisis.
Competition between platforms intensifies
Since launch, BendDao has maintained a consistent max advance rate of 40%, significantly lower than the max advance rate of 80% 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 fierce competition and a declining user base, pushing his advance rate to 60% to stay competitive. This adjustment was made during the winter holidays.
January 2023 peak
Several factors contributed to the surge in NFT lending in January, the report said. One of the main factors was the market vibrancy and Yuga Labs’ Dookey Dash News, which allowed the user 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.
Insight
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 fluctuations.
The quiet activity between 06:00 and 14:00 UTC on weekdays (outside the general wake-up time in the United States) suggests that a significant portion of the activity is occurring within the United States. .
Overall, the report concludes:
“The availability of NFT lending fulfills a valuable market need and encourages the continued development and refinement of the entire NFT ecosystem. However, it is clear that these loans can meet short-term and long-term liquidity needs and provide a valuable market value hedge.”
