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The Coin Rise 2025-05-28 09:14:21

NFT Lending Faces Major Decline, But RWA May Offer a Lifeline

The once-booming NFT lending sector is struggling to stay afloat, with volumes plunging by 97% from their peak in January 2024, according to a new report from blockchain analytics firm DappRadar. The report reveals that the market, which once saw nearly $1 billion in monthly activity, has now shrunk to just $50 million as of May 2025. NFT lending allows holders to take out loans using their tokens as collateral. But despite the underlying infrastructure remaining active, both borrower and lender activity has significantly dwindled. DappRadar analyst Sara Gherghelas says the industry is now in “survival mode,” awaiting fresh catalysts to restore momentum. “For now, the sector seems to be in a holding pattern, waiting either for market recovery or a new use case to reignite interest,” Gherghelas said in the May 27 report. RWA Could Spark NFT Lending Recovery Gherghelas believes one of the most promising revival strategies lies in linking NFTs with RWAs such as tokenized real estate or yield-generating products. These asset types could provide more stable, trusted forms of collateral—unlike the speculative digital collectibles currently dominating the space. She also suggested that infrastructure improvements are essential, including tools that simplify the borrowing process, the development of undercollateralized loan options, and the use of AI to match risk profiles more effectively. Since January 2024, borrower activity in NFT lending has dropped 90%, and lender participation has fallen by 78%. The average loan size has also declined sharply—from $22,000 in 2022 to just $4,000 in May 2025, a 71% decrease. Meanwhile, the average loan duration has shrunk to 31 days, down from 40 days in 2023. Gherghelas suggests this trend points to more short-term liquidity strategies rather than long-term leverage. NFT Market Slowdown Adds Pressure The broader NFT market downturn has only made things worse. Trading volumes in the NFT space have plunged 61% year-over-year in the first quarter of 2025, dropping from $4.1 billion to $1.5 billion. This has had a direct impact on lending, as collateral values have collapsed alongside market sentiment. Only eight NFT lending protocols currently maintain any meaningful market share, showing how much the landscape has narrowed. “The flip-for-liquidity model that worked during bull markets isn’t built for a quieter, more risk-averse environment,” Gherghelas noted. Still, she remains cautiously optimistic: “If the next wave builds on utility, culture, and better design, NFT lending might just find its second wind — one built to last.” The post NFT Lending Faces Major Decline, But RWA May Offer a Lifeline appeared first on TheCoinrise.com .

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