ChainAegis: Blend On-Chain Data Analysis

On May 1, 2023, NFT trading platform Blur officially announced the launch of Blur Lending (Blend). Blend is a peer-to-peer perpetual lending protocol that supports any collateral, including NFTs. Since its first week launch, total loan volume (67,180,783) increased by 270.54% compared to the previous week (18,130,120). Blend's weekly loan volume (shown in green) performed strongly, with weekly loan volume (50,103,252) approximately 2.93 times the total concentrated weekly loan volume (17,077,531).

## 1. Blend Fundamental Analysis

Blend was built through collaboration between Dan Robinson and Transmissions11. Dan Robinson is one of the inventors of Uniswap V3, while Transmissions11 is a researcher at Paradigm and a major contributor to Seaport. Blend's main features include four key points:

(1) **Peer-to-peer mechanism**: Blend adopts a peer-to-peer model where each loan is matched individually.

(2) **Oracle-free**: Uses a complex offline quotation system without relying on oracles, providing the protocol with greater self-consistency and security.

(3) **No expiration date**: By default, Blend loans have fixed interest rates and never expire. Borrowers can repay at any time, which is the biggest improvement over traditional peer-to-peer models.

(4) **Liquidatable**: If an auction fails, borrowers will be liquidated, and collateral belongs to the lender.

Blend also introduced the following two mechanisms:

### (1) Term Loans (Fixed-term loans)

Lenders sign an offline quote to lend a certain amount of ETH at a specific interest rate and maturity time for NFTs of any designated collection. They make it public (for example, by posting it to an off-chain quote repository). Borrowers can browse the off-chain quote repository to select a suitable quote, then create an on-chain transaction to fulfill the lender's proposal, putting their NFT in a lien vault and transferring the principal from the lender to themselves. Before maturity, borrowers can repay the lender (repayment = loan amount + interest) to withdraw collateral. After expiration, if the loan is not repaid, the collateral will be liquidated and belong to the lender. Note that if the NFT's value is already below the repayment amount, borrowers can choose not to repay the loan.

### (2) Refinancing Auctions

Blend doesn't simply provide collateral to lenders but uses Dutch auctions targeting interest rates for competitive auction procedures to extend loans. Dutch auctions, also called "descending price auctions," are a special form of auction where sellers typically call prices from high to low until a buyer accepts the price and completes the transaction.

As shown in the diagram, if borrowers don't repay debts in term loans, refinancing auctions start at 0% interest rate, which will steadily rise. During the auction, new lenders can take over loans by submitting online quotes after determining suitable interest rates, and new lenders must pay full repayment to old lenders. The new rate is the rate determined by the auction. Note that lenders can initiate refinancing at any time, which is not borrower-friendly.

## 2. Data Analysis

### 2.1 TVL

On May 1, Blend's TVL reached $5.21M on launch day. As of May 17, TVL was $22.914M, an increase of 339.8%.

### 2.2 Daily Loan Count

As of May 15, Blend had lent a total of 81,661 ETH across 4,667 loans, with 787 unique borrowers and 1,155 lenders. The following shows Blend's daily loan count and total volume changes:

As shown in the chart, Blend achieved 499 loan transactions on its first day, and despite short-term declines later, overall performance remained stable. As of May 15, the average daily loan volume was 418.9.

### 2.3 NFT Trading Data

Currently, Blend has launched 6 NFT collections: Wrapped Cryptopunks, Azuki, Milady, DeGods, MutantApeYachtClub, and Bored Ape Yacht Club. DeGods launched on May 8, while MutantApeYachtClub and Bored Ape Yacht Club launched on May 15. ChainAegis analyzes their LTV, APY, daily trading volume, and daily refinancing numbers as follows:

### (1) Loan Risk Indicator LTV

Loan-to-Value (LTV) ratio refers to the proportion of loan amount to collateral value. Using home loans as an example, if a house is worth 10 million and the loan amount is 7 million, the LTV ratio is 70%. If asset prices are relatively stable, the LTV ratio is relatively high. Different collateral loans have varying LTV ratios based on banks' individual policies.

The following shows daily LTV changes for each specific NFT collection on Blend. In Blend, LTV = loan amount/collateral value (collateral value = average floor price).

On the second day after launch, Milady had the highest LTV at 84.36%. Wrapped Cryptopunks exceeded Milady from May 2-9, ranking first, then declined afterward. Milady and DeGods had relatively lower LTVs. Previously, Blur officially stated that Cryptopunks, Azuki, and Milady collections would have 2x lending point benefits. Reports suggest these points will be related to future second-season airdrops, with more points potentially leading to more $BLUR airdrop tokens.

### (2) APY

Annual Percentage Yield (APY) refers to the amount earned from compound interest (interest + principal) over one year. According to Dune data, DeGods, MutantApeYachtClub, and Bored Ape Yacht Club had first-day APYs of 479%, 230%, and 260% respectively. After launch, rates began declining rapidly. As of May 17, APYs for MutantApeYachtClub, DeGods, Azuki, Milady, Bored Ape Yacht Club, and Wrapped Cryptopunks were 39%, 19%, 7%, 30%, 8%, and 58% respectively.

### (3) Daily Trading Volume

As APY decreased, trading volume gradually increased, allowing traders to obtain more lending points and increasing their probability of future $Blur airdrops.

The above shows daily trading volumes for different NFT collections on Blend. As of May 17, Blend primarily traded Azuki collection (shown in orange), with cumulative trading volume of 54,100 ETH, accounting for 45.81% of total volume. Wrapped Cryptopunks collection (shown in dark blue) was second with cumulative trading volume of 28,200 ETH, accounting for 23.90% of total volume. DeGods collection has remained relatively stable since launch, with average daily trading volume of 801.3 ETH. Daily trading volumes for MutantApeYachtClub and Bored Ape Yacht Club continue growing, increasing 13.5% and 191.3% respectively compared to their first launch day.

### (4) Daily Refinancing

The following shows Blend's daily refinancing situation. As of May 17, Blend had accumulated 2,793 refinancings. May 10 set a single-day refinancing record with 320 transactions.

By NFT collection category, Blend refinancing was primarily dominated by Milady (shown in gray) and Azuki (shown in orange), with similar daily refinancing numbers, accounting for 43.91% and 41.60% of the total respectively. Despite its short launch time, MutantApeYachtClub also showed decent performance.

### 2.4 Number of Borrowers and Lenders

The following shows daily borrower and lender situations on Blend. Overall, borrowers slightly outnumber lenders. As of May 15, total borrowers were 2,572, while lenders numbered 2,112.

### 2.5 Top 10 Lenders

The following shows TOP 10 lender address information ranked by total loan amount. As of May 15, address 0x048...13a0 had accumulated loans of 3,421.17 ETH, ranking first. Address 0x020...5872 had accumulated loans of 2,460.86 ETH, ranking second. Notably, this address belongs to Machi Big Brother (Ethereum domain: machibigbrother.eth), who previously claimed to launch in the NFT space.

### 2.6 Top 10 Borrowers

The following shows TOP 10 borrower address information ranked by total borrowed amount. As of May 15, address 0x97c...6a20 had accumulated borrowings of 3,833.73 ETH, ranking first. Address 0x023...379f had accumulated borrowings of 1,710 ETH, ranking second.

Comparing TOP 10 lenders and borrowers, lenders generally had more loan transactions with larger total amounts, with the top 6 lender addresses all exceeding 1,000 ETH. In contrast, borrowers generally had fewer loan transactions with smaller total amounts, with only the top 3 borrower addresses exceeding 1,000 ETH.

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