Binance, a leading player in the crypto exchange arena, is set to launch a novel service that will allow non-fungible token (NFT) owners to leverage their NFT assets to secure crypto loans. This service, known as Binance NFT loan, is scheduled for launch on May 26.
For the time being, the service will only support loans in Ethereum, along with high-value NFT collections such as Bored Ape Yacht Club (BAYC), Azuki, Mutant Ape Yacht Club (MAYC), and Doodles. One of the key advantages of this service is the elimination of Ethereum gas fees, which is expected to incentivize users to adopt this new product.
In addition to this, Binance is offering a substantial 70% discount on annual borrowing interest rates, reducing the standard rate from 11.2% to just 3.36%. This promotional rate will be applicable from the launch date until further notice.
As per the Binance NFT website, the loan-to-value ratio for the supported NFT collections will range between 40% and 60%, with BAYC offering the highest and Doodles the lowest. The announcement also mentioned that the Binance NFT loan product will expand to support more assets for borrowing and NFT collateral options in the future.
This move by Binance into the NFT lending market follows closely on the heels of the NFT marketplace Blur’s launch of Blend. However, unlike Binance’s NFT loan service, the Blend protocol allows lenders to set their own interest rates and loan-to-value ratios. This development marks a significant step in the evolution of the NFT market, demonstrating the growing intersection of NFTs and traditional financial services.