Binance’s NFT marketplace has introduced a new feature that enables users to borrow cryptocurrencies using NFTs as collateral, marking its entrance into the NFT lending space.
The Binance NFT marketplace currently supports ether (ETH) borrowing against “blue-chip” NFTs, such as Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Azuki and Doodles, according to an announcement Thursday. More cryptocurrencies and NFTs will be supported in the near future, a Binance NFT spokesperson told The Block.
The feature means Binance NFT users won’t have to sell their NFTs in case of urgent need of money. “NFT Loans will add a new form of liquidity for NFT holders, allowing them to participate in the market without having to let go of their precious NFTs,” Mayur Kamat, head of product at Binance, said in the statement.
The current interest rate on NFT loans is 7.91% p.a. and loan to value ratio ranges from 40% to 60%, according to the Binance NFT website. There won’t be a gas fee or Ethereum transaction fee charge.
Binance introduced its NFT marketplace in April 2021 and launched it in June of that year. Earlier this month, Binance NFT said it will add support for Ordinals, or Bitcoin NFTs, adding to current blockchains Ethereum, Polygon and its native BNB Chain.
The Binance NFT loan feature comes shortly after NFT marketplace giant Blur launched its NFT lending protocol called Blend earlier this month. Blend allows lenders to set their own interest rates and loan-to-value ratios, as The Block Research‘s analyst Brad Kay reported recently. “Blend’s meteoric rise in the NFT lending market is undeniable. As it continues to break new ground, the protocol is proving that a market-driven approach can successfully revolutionize the lending landscape,” according to Kay.
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