NIGHTMARE ON BLUR STREET: NFT Collections Face A Lending Bloodbath As Blur Winds Down Its Platform And Yuga Labs Steps In To Help!

It's looking like an '80s slasher flick across the NFT market, and no collection is safe from the bloodbath!

From the swamp to the igloo, floor prices are bleeding out and hundreds of ETH worth of outstanding loans are coming back to haunt holders after NFT marketplace Blur announced last night that it would be shutting down its frontend and winding down its Blend loan service next month, sending lenders scrambling to collect and borrowers racing to repay!

 

The nightmare began Monday night and continued into Tuesday morning as lenders began recalling hundreds of ETH worth of loans across several popular NFT collections.

According to NFT lender and Blur data analyst A Raving Ape, the recalled debt included 621 ETH tied to Bored Ape Yacht Club NFTs, 502 ETH tied to Pudgy Penguins, 100 ETH each tied to Mutant Ape Yacht Club, and more.

 

When a lender recalls a loan on Blur's Blend protocol, the borrower faces a roughly 30 hour countdown to repay or refinance their debt before their NFT becomes subject to liquidation through a dutch auction.

 

And things could get even scarier!

In subsequent posts, A Raving Ape explained that many of these loans are underwater, meaning the outstanding debt is more than the estimated value of the NFTs backing them.

With Blur's announcement looming over the market, a lot of lenders are now holding bad debt, while borrowers are struggling to find ways to repay or refinance their debt in such a short amount of time. This could create a vicious cycle of falling floor prices, loan recalls, and potential liquidations.

 

However, not everyone around the swamp is running from this nightmare!

As the lending crisis unfolded, Yuga Labs CEO Michael Figge made the rounds on Spaces, including Coffee with Captain and The Grateful Show, and announced that his team at Grails OTC was working to help borrowers refinance healthier loans through NFT lending platform Gondi.

 

“Working with the team this morning to facilitate an orderly transition from blend to gondi easy place to start: we're going to help refinance the healthier loans more plans to follow,” Figge tweeted. “priority for us will be helping out bayc, mayc, bakc, and otherdeeds (the yuga assets available in blend) since this is an ecosystem-wide issue, bandwidth permitting, we're planning on helping out other collections too lots to get through today.”

 

As of Tuesday evening, Figge said that 121 Bored Ape and 156 Mutant Ape loans remained outstanding on Blur, with his team continuing to work toward getting those numbers down to zero.

“our goal is to continue facilitating migration of loans, instilling confidence in bids - as floor buyers step in, LTVs across the board improve additional thanks to lender partners who have stepped up to help close the gap. but again, ultimately, we need all these open loans on blend to go to zero qty before Nov 12."

The Gazette will continue to follow this developing story as borrowers, lenders, and NFT communities work to escape this lending nightmare. Stay tuned for updates!