NFT Lending Market Faces Dramatic Decline: Volumes Down 97% from Peak

As the NFT lending market experiences a significant slowdown, both active borrowers and lenders have seen remarkable reductions.

Key Takeaways

Dramatic Decline: The NFT lending volume has dropped 97% from January 2024's peak, falling to $50 million in May.
Reduced Participation: Active borrowers are down 90%, while the number of lenders has decreased by 78%.
Shrinking Loan Sizes: Average loan amounts have decreased from $22,000 at the market's peak to around $4,000 today.
Stagnant Market: Weekly trading volumes are consistently decreasing, reflecting a market retreat to levels last seen in 2020.
Few Survivors: Pudgy Penguins is one NFT collection maintaining significant lending activity, totaling $203 million in loans this year.

The NFT lending market has seen a complete collapse, with DappRadar reporting that monthly transaction volumes have shrunk to a mere $50 million as of May 2024. This represents an alarming 97% decrease from the market’s prior zenith of $1 billion, experienced in January. The data illustrates a significant drop, noting that active borrowers have fallen by 90% while the number of lenders has diminished by 78% over the past year.

Sara Gherghelas, a blockchain analyst at DappRadar, commented, “The sharp decline suggests that the NFT lending narrative is no longer convincing enough for users, especially under current market conditions.”

The average amount borrowed is also reflecting this downward trend, falling from $22,000 at the height of the market in 2022 to about $4,000 currently — a decline of 71% year-over-year. This indicates a decrease in both the demand for borrowed capital and an increase in lenders' caution about risk.

One notable exception in this drastically changing landscape is the Pudgy Penguins NFT collection, which remains active in the lending space with $203 million in loans issued this year. In contrast, the Blur NFT marketplace's Blend protocol, which once dominated the market with over 90% share, now holds just 30% of outstanding loans. Smaller platforms such as NFTfi and Arcade are still operational but are experiencing greatly reduced activity.

The NFT market has witnessed consistent weekly trading volume declines, leading to capital withdrawal and an overall market retreat to historic lows last seen since its explosive entry in 2020. In 2024, overall trading volumes have fallen nearly 20% compared to the previous year, while total sales have decreased by 18%, indicating one of the toughest years for the market since 2020, as reported by crypto.news.

NFT lending volume collapses 97% from peak as market activity collapses

The NFT lending scene has slumped dramatically, with monthly volumes plummeting to just $50 million in May — a staggering 97% fall from its peak of $1 billion in January 2024. With a 90% decline in active borrowers and a 78% reduction in lenders over the last year, the market is showing signs of severe contraction, according to a recent report by DappRadar.