Binance launched a non-fungible token (NFT) lending feature, which allows users to borrow Ethereum by holding their blue-chip NFTs as collateral.

In traditional finance, assets such as gold and real estate are held as collateral for borrowing. But, NFTs can serve a similar use case.

Blue-Chip NFT as Collateral for Binance Loan

Binance Announced launched the “NFT loan” facility, which allows users to borrow Ethereum (ETH) by holding their NFTs as collateral.

Changpeng Zhao’s company will facilitate the service through a peer-to-peer approach, in which it will act as a pool for loans.

Owners can use only four collections, namely Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Azuki, and Doodles, as collateral. However, Binance wants to expand to more collections and blockchain in the future.

Initially, the platform is keeping the annual interest rate at 3.36% and it will increase to 11.20% later. The loan-to-value ratio is 40% for Doodles, 50% for Azuki and MAYC, and 60% for BAYC collections.

With the launch, the Binance NFT market will compete directly with Blur’s «Blend.» Earlier this month, Blur launched Blend, a peer-to-peer perpetual non-exchangeable lending protocol that allows lenders to maintain flexible rates.

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