SharkTeam: On-chain data analysis Blend operation status

As of May 17, Blend TVL was US$22.91 million, an increase of 339.8% compared to the day it was launched.

Written by: SharkTeam

On May 1, 2023, Blur, an NFT trading platform, officially announced the launch of Blur Lending (Blend for short). Blend is a peer-to-peer perpetual lending protocol that supports arbitrary collateral, including NFTs. Since the first week of launch, the total loan volume (67,180,783) has increased by 270.54% compared to the previous week (18,130,120). 2.93 times the total amount (17,077,531).

1. Blend Fundamental Analysis

Blend was built in collaboration between Dan Robinson, one of the inventors of Uniswap V3, and Transmissions11, a researcher at Paradigm and a major contributor to Seaport. The main features of Blend are the following four points:

(1) Point-to-point mechanism. Blend operates on a peer-to-peer model where each loan is individually matched.

(2) No oracle. Using a complex offline quotation system does not rely on the oracle itself, and the protocol itself has greater self-consistency and security.

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

(4) Can be liquidated. If the auction fails, the borrower is liquidated and the collateral goes to the lender.

Blend introduces the following two mechanisms:

(1) Term Loan (Limited Term Loan)

Lenders sign an offline offer to lend a principal amount of ETH at a specific interest rate and maturity for use in any specified series of NFTs. They make it public (for example, by posting it to an off-chain quote repository). Borrowers can browse the off-chain quotation library to select a suitable quotation, and then the borrower creates an on-chain transaction, fulfills the lender's proposal, puts their NFT in a lien vault, and transfers the principal from Transfer from the lender to yourself. Before maturity, the borrower can withdraw the collateral by repaying the lender (repayment = loan amount + interest). After the due date, if the loan is not repaid, the collateral is liquidated and becomes the property of the lender. It should be noted that if the value of NFT is already lower than the repayment amount, the borrower can choose not to repay the loan.

(2) Refinancing Auction

Rather than simply providing collateral to lenders, Blend uses a competitive auction process called a Dutch auction against the interest rate to extend the loan. Dutch auction, also known as "reduction auction", is a special auction form. Usually, the seller asks the price from high to low until a buyer accepts the bid and the transaction is completed.

Combining the above figure, we can see that if the borrower does not repay the debt in the term loan, the refinancing auction will start at 0% interest rate, and the interest rate will continue to rise steadily. During the auction process, the new lender can take over the loan by submitting an offer online after determining a suitable interest rate, and the new lender needs to pay the old lender full repayment. The new rate is the rate determined by the auction. It should be noted that the lender can initiate refinancing at any time, which is not friendly to the borrower.

2. Data Analysis

2.1 TVL

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

2.2 Daily Loans

As of May 15, Blend has lent a total of 81,661 ETH in ETH, a total of 4,667 loans, 787 independent borrowers, and 1,155 lenders. The following is the daily loan amount and its total change in Blend:

As shown in the figure, there were 499 loan transactions on the first day of Blend's launch. Although there was a short-term decline in the later period, it remained stable overall. As of May 15, the average daily loan volume was 418.9.

2.3 NFT transaction data

At present, Blend has launched 6 NFT series, namely: Wrapped Cryptopunks, Azuki, Milady, DeGods, MutantApeYachtClub and Bored Ape Yacht Club. Among them, DeGods was launched on May 8, and MutantApe Yacht Club and Bored Ape Yacht Club were launched on May 15. ChainAegis’ analysis of its LTV, APY, daily trading volume, and daily refinancing is as follows:

(1) Evaluation of loan risk indicators LTV

Loan-to-Value (LTV) refers to the ratio of loan amount to collateral value. Taking a housing loan as an example, if the value of the house is 10 million and the loan amount is 7 million, the loan-to-value ratio is 70%. If the asset price is relatively stable, the loan-to-value ratio is relatively high, and the loan-to-value ratio of different collateral loans varies according to the bank's own policies.

Here's how Blend's loan-to-value ratio (LTV) has changed on a daily basis for each specific NFT series. In Blend, LTV=loan amount/collateral value (collateral value=average floor price).

On the second day of launch, Milady had the highest LTV value of 84.36%. Wrapped Cryptopunks overtook Milady for the top spot from May 2-9, and has since dropped. Mailady and DeGods have relatively low LTV. Previously, Blur officially stated that the three NFT series of Cryptopunks, Azuki and Milady will have a discount of 2 times the loan points. According to reports, the points will be related to the airdrop of the second season in the future. The more points you have, the more $BLUR airdrop tokens you have the opportunity to get.

（2）APY

Annual Percentage Yield (APY) refers to the amount earned compounded over one year (interest + principal). According to Dune statistics, DeGods, MutantApe YachtClub and Bored Ape Yacht Club series on the first day of launch APY as high as 479%, 230%, 260% respectively. After going online, it began to decrease rapidly. As of May 17, the APY of MutantApeYachtClub, DeGods, Azuki, Milady, Bored Ape Yacht Club, and Wrapped Cryptopunks were 39%, 19%, 7%, 30%, 8%, and 58%, respectively.

(3) Daily transaction volume

With the decrease of APY, the transaction volume gradually increases, and the loan points that traders can obtain increase, and the probability of obtaining $Blur airdrops in the future increases.

The above is the daily trading volume of different series of NFTs on Blend. As of May 17, the Azuki series (shown in orange) was the main transaction on Blend, with a cumulative trading volume of 54,100 ETH, accounting for 45.81% of the total trading volume; Wrapped Cryptopunks series (shown in dark blue) followed, The cumulative transaction volume is 28,200 ETH, accounting for 23.90% of the total transaction volume. The DeGods series has been relatively stable since its launch, with an average daily trading volume of 801.3 ETH. The daily trading volume of MutantApe Yacht Club and Bored Ape Yacht Club is also growing, up 13.5% and 191.3% respectively from the first day of launch.

(4) Daily Refinancing

The following is the daily refinancing status of Blend. As of May 17, the cumulative number of refinancing for Blend was 2,793. On May 10, the number of refinancing in a single day hit a new high, reaching 320.

According to the NFT sequence category, Milady (gray icon) and Azuki (orange icon) are the main refinancing of Blend, and the daily refinancing numbers of the two are not much different, accounting for 43.91% and 41.60% of the total respectively. Although MutantApeYachtClub has been online for a short time, it has also performed to a certain extent.

2.4 Number of Borrowers and Lenders

Below are Blend's daily borrowers and lenders. Overall, there are slightly more borrowers than lenders. As of May 15, the total number of borrowers was 2,572 and the number of lenders was 2,112.

2.5 Top 10 Lenders

Below is the address information for the TOP 10 Lenders ranked by total loan amount. As of May 15, the accumulated loan of address 0x048...13a0 is 3,421.17 ETH, ranking first. Address 0x020...5872 has a cumulative loan of 2,460.86 ETH, ranking second. It is worth mentioning that this address is the address of Huang Licheng (Ethereum domain name: machibigbrother.eth) who previously claimed to launch an NFT circle.

2.6 Top 10 Borrowers

The following is the address information of the TOP 10 borrowers ranked by total amount borrowed. As of May 15th, address 0x97c...6a20 has accumulatively borrowed 3,833.73 ETH, ranking first. The address 0x023...379f has accumulatively borrowed 1,710 ETH, ranking second.

From the perspective of the Top 10 lenders and borrowers, the overall number of loans by lenders is relatively large, and the total amount is relatively large. The addresses of the top 6 lenders are all higher than 1,000 ETH. Relatively speaking, the overall number of loans borrowed by borrowers is small, and the total amount is relatively small. Only the addresses of the top 3 borrowers are higher than 1,000 ETH.