- NFT lending volume drops, GONDI rises as dominant protocol.
- Borrower activity decreased by 90% since 2024.
- A 71% decline in average loan sizes.
NFT lending activity has plunged by 97% from its January 2024 peak, amidst collapsing collateral values, impacting key protocols such as GONDI and Blend.
Market Downturn
The NFT lending ecosystem suffered a significant setback, with the market experiencing a 97% decline in lending volume from January 2024 to May 2025. Collapsing collateral values precipitated the downturn. The key protocols affected are GONDI and Blur. GONDI overtook Blend, initially leading the sector, due to its focus on longer-term, stable loans backed by art NFTs. Despite these efforts, the market contractions persisted.
Impact on Borrowers and Lenders
Borrowers have decreased by 90%, lenders by 78% since January 2024, with the average loan size plummeting from $22,000 in 2022 to $4,000 in May 2025. The effect on the market has been notable.
ETF-based NFT collateral has contributed to this downturn, with the industry’s total value locked plummeting. Institutional involvement has significantly receded, leading to capital flight.
Future Outlook
The downturn highlights the NFT lending market’s susceptibility to collateral-driven instability. According to DappRadar analyst Sara Gherghelas:
“With collateral value collapsing, the lending activity naturally followed. There are a few exceptions that managed to hold or regain traction, but they’ve been outliers, not enough to lift the sector.”
Recovery may require innovations focused on utility and better use-case designs. The impact of regulations remains minimal at this point. Future recovery could be spurred by real-world asset-backed lending or utility-oriented NFTs.
