Can Real-World Assets Rescue the NFT Lending Market?

The NFT lending market, once a booming sector with over $1 billion in monthly loan volume, has collapsed by 97% since early 2024. Current activity lingers around $50 million, as reported by DappRadar. Borrower participation has plummeted 90%, lenders have retreated by 78%, and average loan sizes have shrunk to $4,000—a 70% drop. Even loan durations suggest a shift toward short-term liquidity grabs rather than sustained capital deployment.

Analyst Sara Gherghelas argues that revival hinges on radical innovation. Tokenized real-world assets—real estate, revenue-generating instruments—could stabilize collateral quality. She emphasizes the need for advanced financial infrastructure: undercollateralized loans, credit scoring, and AI-driven risk models. The broader NFT market reflects this decline, with trading volumes down 61% year-over-year.

Yet Gherghelas sees a path forward. Future platforms must prioritize utility, cultural relevance, and mechanical ingenuity to reignite interest. The sector stands at a crossroads: adapt or fade.