NFT Lending Market Plummets 97% Amid Waning Demand

The NFT lending market has experienced a dramatic downturn, with lending volumes plummeting by 97% from their peak of $1 billion in January 2024 to just $50 million in May 2025. This significant decline underscores a broader slowdown in market activity within the NFT sector, reflecting collapsing demand and waning confidence in NFT-collateralized loan products.

The sharp decrease in lending volumes is accompanied by a substantial reduction in active participants. According to a report, active borrowers have decreased by 90% over the past year, while active lenders have fallen by 78%. This data suggests that the appeal of NFT lending has diminished significantly, with borrowers likely discouraged by falling NFT prices and lenders pulling back due to increased risk and reduced liquidity.

The average loan size has also seen a notable decline, dropping from around $22,000 during the 2022 bull market to approximately $4,000. This 71% year-over-year decrease signals a more conservative lending environment and reduced demand for leverage. The shift in loan sizes further emphasizes the market's cautious approach, as participants become more risk-averse.

Despite the overall gloom, some NFT collections have managed to maintain their lending volumes. Pudgy Penguins, for instance, has traded $203 million worth of loans in 2025 alone. This consistent lending volume highlights the importance of brand strength and community backing in sustaining market activity, even in challenging conditions.

Blur’s Blend protocol, once the dominant force in NFT lending, has also seen its market share decline from over 90% to just 30%. This shift indicates a more fragmented market, with other smaller platforms like NFTfi and Arcade experiencing reduced user activity. The decline in Blend's dominance suggests that the market is seeking alternative solutions and platforms that can better meet the evolving needs of participants.

The collapse in NFT lending is reflective of a broader downturn in the NFT market. Weekly trading volumes have been shrinking for months, and 2024 was marked as one of the worst years on record since the NFT market exploded. Overall trading volume declined by 20% from 2023, and overall NFT sales fell by 18%. With no immediate catalyst for recovery, the outlook for NFT lending—and the NFT market as a whole—remains uncertain.