We are now seeing the worst downturn in the NFT Lending sector, as trading volume fell from $1 billion in January 2024 to just $50 million in May 2025. This problem results from people beginning to trust NFTs and lending less, as borrowers have been abandoning the platforms and lenders have seen their participation fall by 78%. The outflow of currencies has seriously hurt faith in the financial market.

Key Takeaways:

• The NFT Lending market had a 97% crash from its January 2024 top, as monthly volume plunged from $1 billion to $50 million.
• GONDI has grown to own 54.2% of the market thanks to its stronger focus on art NFTs and longer loans, while Blend is now behind.
• Currently, the average amount people borrow in loans is just $4,000, down 71% from $22,000 in 2022.
• For the market to recover, projects need to create real-world benefits and position themselves as more than simple trading platforms.

Lenders Are Issuing Loans at a Lower Level

Market health appears to be declining since average loan amounts are declining too. Loans were $22,000 in 2022 and then reduced to $4,000 by May 2025. This shows that consumers are now less willing to make new purchases.

Now, borrowers do not borrow significant sums for speculative trades. Most people use their loans for practical needs and go for the smallest, most secure amounts. Large swings in NFT prices are no longer a good investment strategy.

GONDI Takes the Lead in the Market

Platform dynamics were transformed when GONDI took 54.2% of all outstanding orders. After that, the newcomer surpassed Blend which used to own more than 96% of the market. The change is a result of how users’ preferences and habits are changing.

GONDI got results by narrowing in on those who wanted stable and long-term finances in the art NFT market. The platform is run by CryptoPunks which have already financed more than $21 million. Important collections such as Fidenzas and Beeple pieces come right after

Blend’s decline stems from its reliance on airdrop incentives and short-term trading. That aggressive model couldn’t survive the current market downturn. Users now prefer sustainable lending approaches over quick profits.

Traditional Platforms Are Finding it Hard to Cope

Both NFTfi and Arcade make up less than 10% of the total volume, with Arcade on 4.7% and NFTfi at 7%. Many of these platforms are still centered on popular collections and Pudgy Penguins topped the chart with $203 million in loans since January.

Nonetheless, highly successful collections produce their own sets of difficulties. Like Pudgy Penguins, Azuki and Bored Apes increased in price after launching, but now swim in a pool of volatile prices. So hazy is the outlook that lenders prefer not to provide good rates.

Loan Terms Tighten as Caution Increases

In all platforms, the time between borrowing and returning increased little. Borrowers took out average loans for only 31 days in May 2025, down from 40 days in 2023. Both sides are now acting more cautiously which is what this trend reveals.

Placing the loan for a short period guards lenders against quick price decreases and gives borrowers a fast method to close the trade. In unpredictable markets, most people don’t want to be part of the action for too long. Now, looking after company security takes priority over trying to earn the most profit.

Major Companies Exit NFT Space

The fall of the NFT Lending market isn’t only impacting lending platforms. Lately, DraftKings, GameStop and Bybit all stopped providing services related to NFTs. In their April announcement, Bybit mentioned that trading volumes had fallen.

In March, Starbucks dropped its NFT rewards program. The way major brands left NFTs indicates that the craze weakened very fast. Businesses that once supported NFTs have officially abandoned them.

Conclusion: NFT Lending

Even with changes to the protocol, the NFT Lending industry needs much more to continue. By making blockchain useful in real life, the industry can encourage people to confidently use and increase trading volumes on its platforms. Advances in tokens, credit scoring and effective case examples might help the industry, but a huge investment is still needed.