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

NFT Lending Continues to Grow as Over 18K ETH Borrowed in January NFT Lending Continues to Grow as Over 18K ETH Borrowed in January
NFT Lending Continues to Grow as Over 18K ETH Borrowed in January

Cover/illustration via Cryptooshala

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

The report used online data on loans secured by the Bored Ape Yacht Club (BAYC) and analyzed BAYC by loan price, duration, liquidation value and market dominance.

In addition, eBit labs found that the loan amount in January 2023 returned to peak values ​​not seen since May 2022. For the first time in over nine months, the weekly borrowing volume in the first week of January exceeded 6,000 ETH. In addition, total loans during January reached over 18,000 ETH – or $30,516,660 at press time.

Volumes of the Leding platform
Leding platform volumes (Source: eBitlabs)

In mid-2022, the lending industry gained national attention as BAYC’s floor price cut triggered market pressure and heightened fears of a possible liquidation, eventually leading to a liquidity crunch, the report said.

Liquidation vs. floor series
Elimination compared to series level (Source: eBitLabs)

Platform competition intensifies

Since its launch, BendDao has maintained a consistent maximum advance rate of 40%, which is notably lower than the advanced rates of up to 80% offered by other NFTfi peer-to-peer platforms.

However, in September 2022, the market entry of X2Y2 disrupted this status quo by offering upfront rates in excess of 100%. As a result, BendDao faced stiff competition and user churn, prompting it to increase its promotion rate to 60% to stay competitive. This adjustment was made during the winter holiday season.

Ahead of charts indicating platform distribution
Speed ​​ahead of charts indicating platform distribution (Source: eBitLabs)

January 2023 peaks

The report said that the surge in NFT lending in January was due to several factors. One of the main factors was the exuberance of the market and the Dookey Dash News from Yuga Labs, which encouraged users to step up Yuga-related lending activities. According to the study, the bulk of the loans originated on the three major lending platforms were against Bored Apes, with short-term loan balances for BAYC reaching an all-time high in January 2023.

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


The data shows that the vast majority of loans either repay or liquidate within one day, with long-term loans accounting for a much smaller proportion of the total. This trend suggests that potentially many borrowers are using these loans to meet immediate liquidity needs rather than as a hedge against market value fluctuations.

Credit term
Loan terms (Source eBitLabs)

A lull in activity between 6:00 and 2:00 pm (UTC) on weekdays—outside of normal US waking hours—suggests that a significant amount of activity is taking place in the United States.

When Borrowing Occurs
When Borrowing Happens (Source: eBitLabs)

Overall, the report concluded that:

“The availability of NFT lending satisfies a valuable market need and contributes to the continuous development and improvement of the entire NFT ecosystem. The drivers for borrowing are likely to be varied, but it is clear that these loans can meet both short-term and long-term liquidity needs and also provide a valuable market value hedge.”

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