@blur_io launched Blend, it’s lending platform on May 1. It has done very well since launch.

You can earn lending points by providing loans to others. Combine this with bidding to accumulate points faster!

Many are apprehensive about how it works. This short guide will help start you off!

Blend allows people to borrow eth to “buy now pay later” (BNPL) or from pledging NFTs they own (like margin lending).

So far, these are the collections covered:

• Cryptopunkz

• BAYC, MAYC, BAKC

• Azuki, Beanz

• Degods

• Pudgy Penguins

• Kanpai Pandas

• Milady, Remilio

• Clone X

In these markets, I prefer to farm points than trade.

Before we start, turn on email notifications so that you get notified of loan status changes. These ensures you get notices of when loans are accepted or repaid etc.

Let’s get started.

1/ Pick a collection

Let’s take Beanz for example. Find the collection and click into the “Loans” tab. You will see “all offers” of loans available. The green dots show the actual loans that have been taken up (hover over the dots to see the NFT involved).

Look at the green dots on the right at higher loan values, interest cost (APY) is higher (expected).

Below loan value 1.2, they trend towards 0%. Below 1.1 they are mostly at 0%.

The grey lines are loans that are offered. These are hard to read now, hope they will improve it.

When you click “all loans”, you will see all the active loans in effect. These will correspond to the green dots in the previous chart. The items at the top are loans being auctioned — more on that later.

2/ Creating a loan

Click “Create loan offer”. Start with “set to recommend”. This would set the “max borrow” (the max amount you are willing to lend per NFT) to a recommended level.

Below this level, you will likely not earn points or will earn very low points. You can also set the interest (APY).

Look at the “est points” meter bottom left. As you increase max borrow and interest cost, the meter changes. Towards the green zone, you will earn more points.

Here, at 1.5e I can set APY at 15%. Play around with the two variables and find a level you are happy with.

As an example, I set it at 1.1 (at 0% APY) ensuring I earn points for the loan but still staying relatively safe. Select the size (no. of loans you are offering). Confirm with “lend now”.

You have created your loan. Now sit back and accumulate lending points.

You earn points when the loan offer is open. It stops when the loan is taken up.

If you create a loan with the meter in green, in theory, it is likely to be taken up more quickly and you earn points for a shorter period of time.

Find a balance, where you earn points as long as possible at a level which is not too aggressive.

3/ Loan accepted

If your loan is accepted, you will receive an email. The NFT your loan was used to buy or pledged to you will be in the “lending” tab with a lock icon on it.

Since this is a perpetual loan with no expiry, the borrower has no time-frame to repay.

The borrower can:

• Sit on the loan (maybe repay over time)

• Sell the NFT (if it goes up in value)

• Trigger a refinance (for lower cost) by partially repaying

• Repay fully and claim the NFT

The borrower cannot transfer the NFT until he fully repays the loan.

If the floor price has gone up, the borrower might list it for sale. If it sells, your loan (plus any interest accrued) gets repaid. The borrower keeps the profits above the repayment amount.

The borrower can also trigger a refinance by repaying part of the loan to get a lower cost. If the buyer chooses to do that, Blend finds another loan offer which matches the new loan amount. You get repaid in full.

This pic shows what the borrower does to repay.

4/ Recalling loans

As lender, you can sit on the loan, especially if it has a good interest rate. The amount owed to you will increase daily.

If it is a 0% APY loan (like in my example), you should “close” it as soon as possible and recycle into another loan offer to earn points.

You can close a loan after 24 hours. If you close within 24 hours, there is a 250-point penalty.

After you close a loan, Blend will run a process.

In practice, if it is a collection with a healthy loan market (like Beanz), you will get repaid quickly and painlessly.

After you close the loan, the borrower gets an email notice. In the first 6 hours, the loan is “auctioned”. The interest cost keeps increasing until someone takes it.

This is the chart from above. You can see the “Lend” buttons on the top right. Other lenders can take them up.

If someone takes it up, you get repaid. At the end of 6 hours, if no one takes it up, the borrower is given another 24 hours to repay.

If there are other offers available, Blend may automatically refinance the loan. This is likely with liquid collections. You don’t have to do anything.

If it does not get automatically refinanced, the borrower can choose to fully repay or partially repay to trigger a refinance.

If there are no available offers and the borrower does not repay anything (i.e. he defaults), you can claim the NFT.

5/ Risks

When you close your loan, you may have to wait up to 30-hours to be repaid.

However, if the collection has healthy loan liquidity (like Beanz), and your loan LTV is not too aggressive, Blend normally refinances it with other offers early on. You may not have to wait long.

The real risk is that floor price of the NFT falls below loan value.

Example: You provide a 1.0e loan for Beanz, and floor price has fallen to 0.90e. Let’s call this an “out of the money” loan.

In the chart below, look at the red dots in the top-right beyond the floor price.

If a loan is “out of the money”:

• Borrower unlikely to repay

• Borrower cannot list below the loan value

• Other lenders unlikely to take it up

If you close, the borrower might default. If he really wants the NFT, he might repay or partially repay (and trigger a refinance).

You can wait. Or risk it and close. If he does not repay and defaults, you get the NFT. You can keep it or sell it to stop-loss.

Do not be too aggressive. Allow headroom for price movement when setting “max borrow”, especially with low liquidity or high volatility collections.

6/ Conclusion

Farming lending points is safe. But you may have to wait to get your principal back when you close loans. Pick liquid collections to mitigate this risk.

Keep an eye on the LTV (loan to value) and allow enough headroom for price movement. Be more conservative with low liquidity or high volatility collections.

The key is to find a level you are comfortable with that allows you to earn points sustainably.

There are still many nuances. This is just a starters guide.

Once you get the hang of it, you can develop your risk appetite and fine- tune your strategy.

Hope you found this useful! Good luck!