Just over a year ago, NFT lending looked like it could become the next major vertical in crypto. Today, it’s a different story. This mini report explores how the space unraveled, which players are still active, and where — if anywhere — this sector is headed next.
Key Takeaways
- NFT lending volume has dropped 97% since its January 2024 all-time high, falling from nearly $1 billion to just over $50 million in May 2025.
- GONDI now leads the NFT lending market, holding 54.2% of total outstanding volume, overtaking Blur, which now holds only 30%.
- User activity has collapsed: the number of borrowers is down 90% and lenders down 78% since January 2024.
- Average NFT loan sizes are shrinking: from $22,000 at the 2022 peak to just $4,000 in May 2025, down ~71% YoY.
- On traditional platforms, Pudgy Penguins dominate as collateral, with over $203 million loaned against them since January.
- On GONDI, the story shifts — CryptoPunks and Art NFTs like Fidenzas, Squiggles, and Beeple pieces are the top collateral choices.
Table of Contents
- NFT Lending – The momentum is gone
- GONDI overtakes Blur in a quiet power shift
- Top collateralized collections – Utility, survivors & what still works
- Conclusion: What’s next for NFT lending?
1. NFT Lending – The momentum is gone
After a period of short-lived optimism in early 2024, the NFT lending sector has cooled down significantly. Till 21 of May 2025 we recorded a loan volume just above $50 million, marking a 83% drop since the beginning of the year and a 97% decrease from the peak in January 2024. Back then, volumes were nearing the $1 billion mark, as platforms like Blur’s Blend and NFTfi saw strong adoption from traders looking to unlock liquidity without selling their NFTs.
Now, the picture looks entirely different. The sharp decline suggests that the NFT lending narrative is no longer convincing enough for users, at least not in the current market conditions.
Part of this slowdown ties back to the overall health of the NFT market. Most blue-chip collections have taken a big hit, with floor prices down more than 50% from their peak valuations. 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.
The average loan duration in May stood at 31 days, a figure that remained fairly stable throughout 2024 and into 2025. This contrasts with 2023, where the average was closer to 40 days, indicating that loans are being taken more frequently but for shorter periods, perhaps a sign of more tactical liquidity plays.
Another notable change is in the size of the loans. This month, the average principal was around $4,000, down from $14,000 in May 2024, and significantly below the $22,000 peak seen in early 2022. That’s a 71% year-over-year decrease, and it shows that either users are borrowing against lower-value assets or simply becoming more conservative with leverage.
When it comes to participation, the trend mirrors the volume. January 2024 was the peak, with over 20,000 borrowers and nearly 3,700 lenders. In May 2025, those numbers dropped to 2,049 borrowers and 828 lenders, a decline of around 90% and 78%, respectively. This isn’t just a drop in usage — it’s a signal that user confidence and collection liquidity have both dried up.
So far, 2025 has not delivered a compelling reason for NFT lending to bounce back. While the infrastructure is still here and the platforms remain active, activity has slowed across the board. For now, the sector seems to be in a holding pattern, waiting either for market recovery or a new use case to reignite interest.
2. GONDI overtakes Blur in a quiet power shift
Just months ago, Blur’s Blend protocol was the undisputed king of NFT lending, holding over 96% of the market in early 2025 and driving hundreds of millions in volume off the back of its airdrop-fueled growth. But things have changed. A new protocol has quietly risen to the top: GONDI.
By mid-May 2025, GONDI controls 54.2% of the outstanding NFT lending market, compared to Blend’s 30% share. This marks a major turning point, not just in platform dominance, but in how lending demand is shifting toward more sustainable, less speculative models.
Blend’s early success was largely fueled by airdrop incentives and high-volume flipping activity. But as those incentives faded, so did the momentum. In contrast, GONDI has steadily gained ground since Q1 2025, appealing to users seeking a more structured lending experience.
The protocol landscape has also diversified ,but only slightly. The number of active NFT lending dapps is still limited, with only eight protocols holding any meaningful share. Behind GONDI and Blend, we find:
- NFTfi (7%)
- Arcade (4.7%)
- JPEG’d (2%)
- Metastreet, Zharta, and X2Y2 (all below 1%)
Blur’s Blend isn’t gone, but it no longer dominates. What we’re seeing instead is the emergence of new borrowing behavior: longer-term debt, more protocol optionality, and likely more off-market borrowing logic (e.g., for tax strategies or RWA integrations).
While the total volume in NFT lending is still down sharply from 2024 highs, GONDI’s rise shows the market is evolving, not just shrinking. For the first time in months, we’re seeing meaningful competition return to the space.
3. Top collateralized collections – Utility, survivors & what still works
In a market where overall lending activity has collapsed, a handful of NFT collections continue to play a role, not because of hype, but because they’ve managed to retain utility, liquidity, value, or simply relevance.
Across protocols like Blur, NFTfi, and Arcade, Pudgy Penguins lead the lending market by a wide margin. Since the beginning of 2025, they’ve generated over $203 million in loan volume, accounting for 40% of all collateralized loans. Their steady floor price, expanding IP, and strong community presence have helped maintain their status as a reliable source of liquidity.
Trailing behind are Azuki ($85M, 17%) and BAYC ($46M, 9%), while collections like Doodles, Milady, Lil Pudgys, and MAYC contribute between 5–9% each. This distribution highlights a shift from speculative momentum plays to collections with perceived brand strength and long-term utility.
On these platforms, collections like Azuki and Milady, while frequently used, are also more volatile, increasing the risk of liquidation. In contrast, the more stable pricing of Pudgy Penguins or Lil Pudgys offers lenders greater protection.
Meanwhile on GONDI, the new leading protocol in 2025, the picture looks entirely different. Rather than being dominated by traditional PFPs, GONDI’s lending activity is skewed toward Art NFTs and curated 1/1 collections, a surprising but telling development in a bear market.
As of May 20, 2025, CryptoPunks top the chart on GONDI with over $21 million in active loans, showing they remain one of the most trusted forms of NFT collateral.
This lending behavior marks a clear return of interest in Art NFTs as viable collateral. If we thought the art market was dead, GONDI’s data proves otherwise. In a sector where users are now seeking quality over hype, these collections, rooted in artistic provenance and cultural relevance, are emerging as safe havens for liquidity.
This divergence in collateral preferences between platforms is telling. While some users continue to favor PFPs, others — particularly on GONDI — are leaning into art, provenance, and long-term cultural value. It’s an unexpected twist in the NFT lending story, and it signals that what survives may not always be what dominated during the bull run.
4. Conclusion: What’s next for NFT lending?
The current state of NFT lending tells a familiar story: volume is down, user activity has collapsed, and speculative momentum has dried up. But with the latest shifts in platform dominance and collateral preferences, it’s clear this isn’t just a cooldown — it’s a restructuring.
After peaking in early 2024, the sector has pulled back sharply. In May 2025, lending volumes are down 94% from their all-time high, and active users have fallen by over 90%. The once-crowded protocol landscape, home to over 20 platforms, has narrowed to a smaller, more fragmented field. And while Blur once held 96.4% of the market, it’s now GONDI, that leads, with over 54% of active loan volume.
Will NFT lending go mainstream again?
Not as it stands today. The flip-for-liquidity model that worked during bull markets isn’t built for a quieter, more risk-averse environment. But that doesn’t mean NFT lending is finished, it’s simply shifting focus.
Instead of speculation, users are now leaning into longer-term value and cultural relevance. On traditional platforms, collections like Pudgy Penguins and Azuki still command attention. But on GONDI, we’re seeing a different narrative emerge: one where Art NFTs like CryptoPunks, Fidenzas, and Autoglyphs are becoming the preferred form of collateral.
If anything, NFT lending is shedding its hype-driven shell — and what’s left might be more durable.
What could reignite the sector?
To move beyond survival mode, the space needs new catalysts:
- Real-World Asset NFTs (RWAs): Tokenized real estate, invoices, or yield-bearing assets could unlock more stable, trusted collateral sources.
- Intent-Based UX: Tools that abstract borrowing complexity and respond to user goals (“I need $3,000 for 30 days”) could broaden access.
- Protocol Innovation: A move away from simple peer-to-peer listings toward smarter infrastructure — undercollateralized loans, credit scores, AI risk matching — could transform the experience.
Final word
NFT lending isn’t over. It’s evolving.
The hype has cleared out, the short-term flippers are gone, and what remains is something quieter, but potentially more resilient. Platforms are diversifying, use cases are shifting, and collateral preferences are changing. If the next wave builds on utility, culture, and better design, NFT lending might just find its second wind — one built to last.
Until then, the sector remains in transition. And that’s where some of the most interesting things tend to happen.
