According to one Report The latest news from eBit labs, a digital asset analysis company, shows that NFT (loan) lending activity hit a record high in January, returning to the highest level since the record high in this field in May 2022.
The report uses on-chain data on Bored Ape Yacht Club (BAYC)-backed loans and examines BAYC in terms of loan price, tenor, liquidation value, and market dominance.
Additionally, eBit Labs found that borrowing in January 2023 has returned to its highest level since May 2022. For the first time in more than 9 months, weekly lending volume exceeded 6,000 ETH in the first week of January. Additionally, the total amount borrowed in January exceeded 18,000 ETH, or $30,516,660 at the time of writing.
Loan Volume | Source: eBitlabs
The report also pointed out that in mid-2022, the lending industry will receive widespread attention as the fall in the BAYC floor price puts pressure on the market and raises concerns about liquidation risks, eventually leading to a liquidity crisis.
Liquidations and reserve prices | Source: eBitLabs
The competition between platforms is more intense
Since its launch, BendDao has maintained the highest prepaid rate of 40%, which is far lower than the 80% of other peer-to-peer NFTfi platforms.
However, in September 2022, X2Y2 will enter the market, breaking the status quo with an advance rate of over 100%. As a result, BendDao faced fierce competition and user loss, and was forced to increase its push rate to 60% to remain competitive. This adjustment was made during the winter break.
Push rate represents platform distribution | Source: eBitLabs
Peaking in January 2023
According to the report, a variety of factors drove NFT lending activity in January, with the main factors being market excitement and news of Yuga Labs’ Dookey Dash, which encouraged users to increase Yuga-related lending activity. Research shows that most of the loans issued by the three major lending platforms involve boring apes, and the short-term loan balance of BAYC hit a record high in January 2023.
Lending BAYC in ETH | Source: eBitLabs
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The data showed that most loans were repaid or liquidated within a day, with a much smaller proportion of long-term loans. This trend suggests that more borrowers may be using these loans to meet immediate liquidity needs rather than to hedge against fluctuations in market values.
Loan term | Source: eBitLabs
This week’s activity quieted down during the U.S. market holiday, suggesting a significant portion of the activity took place in the country.
Lending Activity Hours | Source: eBitLabs
Overall, the report concluded that:
“The availability of NFT loans responds to market demand and helps drive the continued growth and maturity of the entire NFT ecosystem. Motivations for borrowing may vary widely, but it is clear that these loans can meet short- and long-term liquidity needs and provide valuable hedging.”
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