Particularly in the rapidly evolving and innovative space of decentralized finance (DeFi). Perhaps the most exciting trend of all is the rise of NFT lending dapps. These platforms enable users to take out loans using their NFTs as collateral. They make it possible for users to lend out their crypto in exchange for interest payments. Through this synergistic approach, we are able to create exciting new opportunities for NFT holders and DeFi enthusiasts alike. Jason, a blogger covering various topics, explains how these platforms work, the potential benefits and risks, and how to navigate this evolving market.

NFT lending dapps are a hot new trend within the DeFi space and a symptom of the overall NFT boom. From just 110k users in 2020, DeFi has surged to 6.77M as of 2023. Projections expect this figure to climb to 22.09 million by 2028. With each user projected to bring in an average of $1,378 in 2024, the revenue impact would be significant. Among those countries, the United States is leading the charge. By 2024, EV sales in the U.S. are projected to reach $12.5 billion. This NFT boom has opened the door to specialized platforms, such as NFT lending dapps.

Traditionally, DeFi loans required significant over-collateralization. This is where NFT lending dapps provide a more customized solution by enabling users to put their unique, one-of-a-kind, digital assets to work. These marketplaces are paving the way for how consumers will use and engage with NFTs. Perhaps counterintuitively, digital collectibles have quickly grown into hugely popular and immensely valuable assets. Today, you can put them to work to tap liquidity and earn income.

Understanding NFT Lending Dapps

NFT lending protocols directly support NFT loans, allowing NFTs to be used as collateral. This allows NFT owners to collateralize their NFTs in order to borrow cryptocurrency or stablecoins without needing to sell their NFTs by locking them in a smart contract. Lenders provide all the capital and make a return by earning interest on their loans. At the same time, borrowers can unlock capital while retaining ownership of their NFTs.

These platforms are all completely decentralized, using smart contracts to automate the entire lending and borrowing process. This eliminates the cost and inefficiency of intermediaries, delivering significant transparency and efficiency benefits. The specific mechanisms can vary between platforms, but the core principle remains the same: NFTs serve as collateral for loans.

How NFT Lending Works

  1. NFT Valuation: The platform assesses the value of the NFT being used as collateral. This can be based on factors like floor price, historical sales data, and rarity.
  2. Loan Terms: Borrowers specify the loan amount and repayment terms, including interest rate and loan duration.
  3. Collateralization Ratio: The platform determines the collateralization ratio, which is the ratio of the NFT's value to the loan amount. Higher ratios mean more collateral is required.
  4. Smart Contract Execution: Once the terms are agreed upon, the NFT is locked in a smart contract, and the loan is disbursed to the borrower.
  5. Repayment or Liquidation: If the borrower repays the loan with interest within the agreed timeframe, the NFT is returned. If the borrower fails to repay, the NFT is liquidated to repay the lender.

Key Players in the NFT Lending Space

A number of NFT lending dapps have launched, each taking different creative directions and varying approaches to the concept. Some notable platforms include:

  • Fungify: A non-custodial NFT peer-to-contract marketplace and lending protocol.
  • Balloon: A protocol that allows users to deposit and earn interest on NFTs.
  • Alpha Quark: An NFT marketplace, NFT collateral lending service, and metaverse platform.
  • Furion: An NFT liquidity platform that allows users to swap and collateralize NFTs fractionally.
  • Astaria: An NFT platform that allows users to access liquidity.
  • Gondi: An NFT lending platform that helps users get cheaper and faster loans at more flexible terms.
  • Kyoko: A cross-chain platform that facilitates GameFi NFT lending for both players and guilds.
  • Cyan: A platform that offers "Buy Now, Pay Later" for the metaverse.
  • Solvent: An NFT lending protocol that allows users to convert their NFTs into fungible tokens.
  • JPEG'd: A protocol that allows users to collateralize NFTs for synthetic stablecoin.
  • Arcade: Allows users to underwrite fixed-rate term loans using NFTs as collateral.
  • LlamaLend: Provides liquidation opportunities for small NFT projects.
  • Supermojo: A buy now, pay later system for purchasing NFTs.

Each platform has its own unique features and focuses on specific niches of the NFT market. For instance, Kyoko Finance specializes in GameFi NFTs and JPEG’d lets you borrow synthetic stablecoins against NFTs.

Benefits and Risks for Lenders and Borrowers

NFT lending dapps promise significant value and utility for lenders and borrowers alike, but come with plenty of dangers as well. Understanding these influences will be key to thinking through smarter and more equitable decisions.

Benefits for Borrowers

  • Access to Liquidity: Borrowers can access capital without selling their NFTs, allowing them to retain ownership of their valuable assets.
  • Leverage Opportunities: Borrowers can leverage their NFTs to invest in other opportunities or cover unexpected expenses.
  • Avoid Capital Gains Taxes: By borrowing against their NFTs instead of selling, borrowers can avoid triggering capital gains taxes.

Risks for Borrowers

  • Liquidation Risk: If the value of the NFT collateral decreases or the borrower fails to repay the loan, the NFT can be liquidated.
  • Interest Rates: Interest rates on NFT loans can be high, especially for less liquid or riskier NFTs.
  • Smart Contract Risk: As with any DeFi platform, there is a risk of smart contract bugs or exploits that could lead to loss of funds.

Benefits for Lenders

  • Earn Interest: Lenders can earn interest on their cryptocurrency by providing loans to NFT holders.
  • Diversification: NFT lending can provide a way to diversify a crypto portfolio and generate passive income.
  • Exposure to NFTs: Lenders can gain exposure to the NFT market without directly owning NFTs.

Risks for Lenders

  • Default Risk: Borrowers may default on their loans, resulting in the lender having to liquidate the NFT collateral.
  • NFT Valuation Risk: The value of the NFT collateral may decline, making it difficult to recover the full loan amount.
  • Liquidity Risk: It may be difficult to quickly liquidate the NFT collateral if needed, especially for less liquid NFTs.

Getting Started with NFT Lending Dapps

For those interested in exploring NFT lending dapps, here are some practical steps to get started:

  1. Research Platforms: Explore different NFT lending dapps and compare their features, interest rates, and collateral requirements.
  2. Assess NFT Value: Evaluate the value and liquidity of your NFTs to determine their suitability as collateral.
  3. Understand Loan Terms: Carefully review the loan terms, including interest rates, repayment schedules, and liquidation policies.
  4. Start Small: Begin with small loan amounts to test the platform and understand the risks involved.
  5. Monitor Collateral Value: Continuously monitor the value of your NFT collateral to ensure it remains sufficient to cover the loan.
  6. Security Measures: Use hardware wallets and strong passwords to protect your crypto assets and NFTs.

Navigating the Hype and Avoiding Pitfalls

NFT lending dapps, like all other new technologies, are culturally prone to hype and speculation. We have to go into this new market sober-minded and self-aware to avoid the pitfalls of the past.

  • Do Your Own Research (DYOR): Don't rely solely on social media or influencer endorsements. Conduct thorough research on the platforms and NFTs you're considering.
  • Understand the Risks: Be aware of the potential risks involved, including liquidation, smart contract vulnerabilities, and market volatility.
  • Diversify Your Portfolio: Don't put all your eggs in one basket. Diversify your crypto and NFT holdings to mitigate risk.
  • Be Wary of Scams: Be cautious of scams and phishing attempts. Always double-check website addresses and verify information before interacting with any platform.
  • Stay Informed: Keep up to date with the latest developments in the NFT and DeFi space to make informed decisions.

The Future of NFT Lending

Considerations NFT lending dapps are an exciting development in the maturation of DeFi and the NFT ecosystem. As the technology matures and large-scale adoption takes place, these platforms can open up thrilling new possibilities for NFT holders. They do have the power to radically change how we treat digital assets.

NFTs are quickly becoming a mainstay of the financial ecosystem. NFT lending dapps will be an important part of this permanent mix. We can expect more sophisticated lending models, risk management tools, and interoperability between different platforms in the future.

Sure, challenges remain, such as regulatory uncertainty and a lack of clear valuation mechanisms. The promised advancements of NFT lending are absolutely impossible to overstate. As the market continues to change, it’s more important than ever to be in the know. Treat this alluring new frontier like the opportunity it is—with both caution and sober optimism.

Exploitation and Scams in the Crypto Space

As exciting and promising as the crypto space can be, it remains a land ripe with exploits, scams, and other unsafe practices. Here's a look at some recent incidents:

Loopscale Rekt — Oracle Exploitation Turns Hype into Havoc

Loopscale, which got hit by an oracle exploit, saw what should have been a positive hype cycle transform into tumult. This event highlights the need for strong security practices and the dangers of oracle dependencies.

$330M BTC Theft via Social Engineering Scam

That’s a shocking $330 million worth of BTC that was lost to one of the most elaborate social engineering tricks ever seen. This really goes to show how susceptible even advanced crypto users are to highly targeted social engineering. Education and vigilance are key defenses.

Fake MetaMask Airdrop Scam

A recent phishing campaign involving a fraudulent MetaMask airdrop deceived unaware victims, illustrating the ever-present danger of phishing scams. Customers are encouraged to independently check any promotions for their legitimacy and not to click on links that look suspicious.

$MOVE Scam Exposed, But Market Stays Unfazed

The reveal of the $MOVE scam hardly dented market sentiment. This is an alarming indication that participants are either indifferent or ill-informed on the state of play. This emphasizes the importance of increased education and awareness campaigns.

The Hidden Scam Behind Copy-Pasting Wallets

The second more subtle yet equally dangerous scam is luring users into the act of copy-pasting malicious wallet addresses. This serves as a reminder, again, to always verify recipient addresses prior to sending on-chain transactions.

Phishing Trends and Reports

Phishing is one of the oldest and still most common threats in the crypto space. Here's an overview of recent trends:

April 2025 Losses Top $364M, Mostly from Phishing

Losses in April 2025 were over $364 million, with phishing attacks making up the overwhelming majority. This underscores that phishing tactics continue to be successful and that we need stronger, more effective security.

April Phishing Report Shows More Victims, Less Damage

So, although more people fell for phishing attempts in April, the total financial toll was not as high. This indicates that users are wising up to phishing tactics, but continuing to stay on guard is key.

Phishing Trends: Losses Decline, Attacks Stay Steady

Phishing losses may be going down, but people are still being attacked at a constant rate. This is a positive sign that we’re making measurable progress on security improvements, but it doesn’t mean the threat has disappeared.

Phishing Goes Physical — Ledger Scam Reaches Mailboxes

Scammers are continuing to up their games, as a recent Ledger scam that made it into people’s physical mailboxes proves. This further highlights the importance of striking a balance between constant vigilance online and in the real world.

Market Reactions and Community Sentiment

Market reactions and community sentiment sometimes seem like a barometer for the chaotic and unpredictable nature of the world of crypto.

$ZORA Token Crashes Post-Launch, Investor Sentiment Turns Sour

The $ZORA token tanked upon release, further embittering early investors. This really illustrates the risk of every launch of a new token with each round of due diligence needed.

Ragnarok’s Risky Pivot Sparks Community Outrage

Ragnarok’s controversial pivot was met with anger from within the Ragnarok community, an event that highlights the crucial need for transparency and community engagement in any crypto project.

Engines of Fury: A Case Study in Web3 Gaming Disappointment

Engines of Fury is yet another example of the failures of Web3 gaming. More importantly, it showcases the challenges in creating fun and monetarily viable blockchain games.

Web3 Games Still Don’t Understand Monetization

Web3 games are still having a hard time monetizing, showcasing the demand for more efficient, gamer-friendly business models.

Innovations and Developments in Crypto Security

Despite these dangers, innovation continues and new developments to secure crypto assets are emerging.

Wolf Financial Takes Cybersecurity Seriously Amid Growth

As Wolf Financial rapidly expands its user base, taking cybersecurity measures should show users that the safety of their assets is a top priority.

SEAL Safe Harbor Gains Momentum in DeFi Security

That’s why SEAL Safe Harbor is fast becoming the go-to solution for increasing DeFi security. It offers a strong framework around it that protects from potential exploits and vulnerabilities.

Auditing Smart Contracts and Decentralized Finance Protocols

Auditing smart contracts and decentralized finance protocols, if done properly, would help identify and mitigate security risks before launching to the community.

Blockchain Security in Focus: Investigating Threats and Vulnerabilities

Cybersecurity researchers are already looking into blockchain threats and vulnerabilities. Their work is serving to inform the development of more appropriate and robust security measures.

Notable Events and Trends in the Crypto Landscape

It’s a fast-moving crypto landscape, with new developments and trends happening every day.

BlackRock’s Blockchain Move Sparks Debate

BlackRock’s sudden interest in blockchain has raised some eyebrows—and by some, we mean everyone—as this further illustrates the influx of traditional financial institutions into the crypto space.

Central Bank Alarmism vs Crypto Sovereignty

Alarmism from the central banks around the world is in direct opposition to the core value of crypto sovereignty, highlighting the persistent argument between centralized and decentralized finance.

Bubblemaps Offers Clarity on $BOOP Token Distribution

Bubblemaps lends transparency to the distribution of the $BOOP token to make the detection of whale manipulation and insider activity abundantly clear.

Bubblemaps V2 Launches on Photon with Real-Time Analysis

Bubblemaps V2 goes live on Photon, providing an interactive real-time analysis of the distribution of tokens and activity on the network.

The Intersection of Crypto and Broader Trends

Crypto is now more connected than ever to what’s been happening nationally and globally — a confluence of tech and culture and politics.

Crypto’s Fade, AI’s Rise

Now, crypto is out of the mainstream zeitgeist. In parallel, AI has been surging, reflecting the shifting interests and priorities of the tech community.

TikTok, Power, and the New U.S. Narrative

TikTok is about redefining eras of U.S. power and narrative control. Social media seems to be the only growing space used to influence public perception.

Elon’s Timeline Under Siege — Scam Ads and Fake Accounts Rampant on X

Scam advertisements and fraudulent profiles have taken over Elon Musk’s timeline on X. This unfortunate reality is emblematic of the difficult war against social media misinformation.

XMR Pumped by a Scammer — And the Community Fell for It

XMR was pumped by a scammer, and the community fell for it, highlighting the vulnerability of crypto markets to manipulation and misinformation.

Emerging Technologies and Tools in the Crypto Space

For solutions new and old, technologies and tools are emerging with the potential to improve the functionality and security of the crypto space.

Nansen API Launches Closed Beta for Pro Users

Nansen API takes data analytics to the next level, providing unparalleled insights into the evolving crypto market.

Sherpa Joins Chainlink BUILD to Enhance DeFi Strategy Automation

Sherpa has entered Chainlink BUILD to accelerate its DeFi strategy automation. By using Chainlink’s secure oracle network, they are able to make DeFi applications more productive and efficient while increasing reliability.

SushiSwap Tackles MEV with Private Transaction Routing

SushiSwap is on the forefront of tackling MEV (Miner Extractable Value) exploitation. They are routing traders through private transactions to reduce front-running and other predatory behaviors by increasing costs for exploiters.

AirBorne: The Most Dangerous Apple Bug of 2025

AirBorne, also known as the most dangerous Apple bug of 2025. This finding highlights the growing imperative of vigilance, continuous monitoring, and routine security updates to the tech industry.

NFT lending dapps are just one piece of the puzzle, but they represent a significant step toward a more inclusive and accessible financial future.