NFT Lending Is in Critical Condition: Down 97% — Is There Any Way Back?
The NFT lending market has absolutely tanked in 2025, plummeting from $1 billion in January to just $50 million today — a shocking 97% collapse in less than 6 months.
It’s not just a correction; it’s a full-on capitulation.
Lenders & Borrowers: Both Ghosted
According to DappRadar’s latest report:
- Borrowers dropped by 90%
- Lenders fell by 78%
- Average loan size shrunk from $22K in 2022 to just $4K in 2025
Even hardcore NFT believers are now on the sidelines. The hype has been replaced by hesitation.
Gondi Is Winning What’s Left of the Market
In this shrinking battlefield, Gondi has emerged as the new king — eating up 54.2% of market share with a focus on long-term art-based lending.
Compare that to Blend, once the king with 96% dominance, now losing steam as it struggles to retain liquidity without constant airdrops and incentive loops.
Pudgy Penguins Lead Loan Activity
Despite the downturn, a few blue-chip and are still moving capital:
- Pudgy Penguins: $203M loaned since January
- CryptoPunks, Azuki, Beeple, Fidenzas also seeing some traction
Meanwhile, average loan duration has shrunk from 40 days to 31 days, showing users are nervous and keeping exposure short.
Even Big Brands Are Backing Out
It’s not just users — big Web2 players are ditching NFTs:
- Starbucks shut down its loyalty program
- GameStop and DraftKings pulled the plug on their NFT marketplaces
- Bybit and X2Y2 exited the NFT space entirely
X2Y2 even announced plans to pivot into AI. That’s how cooked the NFT lending meta is.
What Can Save NFT Lending?
Per DappRadar, here’s what might bring the market back:
- Real-world assets (RWA) as collateral
- Intent-based UX instead of listing-only models
- DeFi-native credit scores to minimize rug risk
- Utility-first NFTs — think gaming, ticketing, and identity
Bottom Line: It’s Not Dead, But It’s Definitely in a Coma
The lending market isn’t dead yet, but it needs a serious rebrand and tech upgrade to come back.
For now, projects like Gondi and collections like Pudgy Penguins are keeping the lights on.
But unless we move from JPEG hype to real use cases, lending might become another relic of the last cycle.
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