Key Takeaways:
NFT lending volume has plunged 97% from its 2024 peak, with borrowers and lenders retreating sharply.
GONDI now dominates the sector, overtaking Blend by offering longer-term, stable lending backed by art NFTs.
For revival, the market needs real-world use cases and utility-driven innovations beyond protocol tweaks.
The NFT lending market has tumbled by 97% from its January 2024 peak, dropping from nearly $1 billion in monthly volume to just over $50 million in May 2025.
Once a booming sector for unlocking liquidity, NFT lending is now in freefall as user activity, loan sizes, and confidence vanish, according to a recent report by DappRadar.
The decline is broad. Borrowers have dropped by 90%, and lender participation has fallen 78% since January last year. Average loan size has shrunk from $22,000 in 2022 to $4,000 this May — a 71% year-over-year decrease. T
GONDI Overtakes Blur to Lead NFT Lending Market
The shift in platform dominance underscores the change in user behavior. GONDI now leads the sector with 54.2% of total outstanding volume, overtaking Blur, whose Blend protocol once controlled over 96% of the market.
Blend’s rise was fueled by airdrop incentives and aggressive flipping, but that model hasn’t survived the bear market.
GONDI, by contrast, has gained ground by catering to users looking for longer-term, more stable lending options.
Collateral preferences have changed too. On traditional platforms like NFTfi and Arcade, Pudgy Penguins dominate, generating over $203 million in loans since January.
Azuki and Bored Apes follow, but volatility has hurt their lending reliability. Meanwhile, on GONDI, the focus has shifted to art NFTs and 1/1 pieces.
CryptoPunks lead the way with over $21 million in active loans, followed by high-end generative collections like Fidenzas and Beeple works.
Loan durations are also tightening. The average in May 2025 stood at 31 days, down from around 40 days in 2023.
The shorter terms reflect a more cautious and tactical approach by borrowers who are no longer betting on big swings.
Eight protocols still hold meaningful market share, but only two are dominant.
Behind GONDI and Blend are NFTfi (7%), Arcade (4.7%), and JPEG’d (2%). Metastreet, Zharta, and X2Y2 trail far behind with sub-1% shares. The field has thinned significantly from its peak.
NFT Lending Isn’t Dead
DappRadar said the NFT lending market won’t bounce back on art-backed loans and protocol tweaks alone.
To move from speculative niche to financial utility, the sector must embrace new use cases — from tokenized real-world assets and intent-based borrowing to credit-scored lending models.
“If the next wave builds on utility, culture, and better design, NFT lending might just find its second wind — one built to last,” it said.
Notably, in recent months, DraftKings, GameStop, and Bybit have all shut down their NFT platforms, with Bybit citing a steep decline in trading volumes in its April 8 announcement.
X2Y2 has also revealed plans to wind down its marketplace by April 30 to pivot toward artificial intelligence.
Back in March, Starbucks, the renowned multinational coffee chain, decided to terminate its NFT rewards program.
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