Blockchain analytics platform DappRadar says that linking real – world assets with non – fungible tokens (NFTs) could be a key catalyst to revive the declining NFT lending sector. Here’s the background and analysis:
The Current Dire State of the NFT Lending Market
Sharp Decline in Volumes: The NFT lending market has witnessed a drastic 97% drop in volumes, from a peak of around $1 billion in January 2024 to just $50 million in May.
Reduced User Activity: Borrower activity has declined by 90% and lender numbers have shrunk by 78% since January last year. The average NFT loan size has also plummeted from a peak of $22,000 in 2022 to $4,000 in May, a 71% year – over – year decrease. Additionally, the average loan duration has decreased from 40 days in 2023 to 31 days in 2024 – 2025. This slowdown is closely related to the overall NFT market decline, with volumes dropping 61% in the first quarter of 2025 compared to the previous year.
How Real – world Assets Can Help
Providing Stable Collateral: Real – world asset – backed NFTs, such as tokenized real estate or yield – bearing assets, can offer more stable and trusted collateral sources. Traditional NFTs often have highly volatile values, making lenders reluctant to offer large loans. In contrast, real – world assets usually have more stable values, which can increase lenders’ confidence and willingness to provide loans, thereby injecting new vitality into the NFT lending market.
Expanding Use Cases: Linking real – world assets with NFTs can create new use cases and application scenarios. For example, tokenized real estate NFTs could allow property owners to use their properties as collateral to obtain loans through the NFT lending market. This not only provides a new financing channel for property owners but also expands the business scope and user base of the NFT lending market.
DappRadar analyst Sara Gherghe Las also mentioned that in addition to real – world assets, tools that simplify borrowing against NFTs for holders, and the creation of “smart infrastructure” such as undercollateralized loans, credit scores, and artificial intelligence risk matching, could also be catalysts for reigniting NFT lending.
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