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Apart from the previously popular Blur, ParaSpace is currently one of the hottest platforms in the NFTFi sector (many of you may have heard about the recent controversy surrounding its founding team). In about six months, its Total Value Locked (TVL) has surged to $88.67 million, securing the second position in NFT lending TVL, earning it the title of "BendDAO Killer." I had the opportunity to participate in the same space as ParaSpace before, so today let's analyze ParaSpace together.

Simply put, like BendDAO, ParaSpace is a peer-to-pool NFT lending protocol. Unlike peer-to-peer lending protocols that only allow 1-to-1 transactions, the peer-to-pool model creates a large pool for lending. Users can collateralize their NFTs to address the issue of NFT illiquidity.
Considering the presence of BendDAO, what are the core advantages and highlights of ParaSpace? We can summarize them into four aspects:

1. APE Staking Service: This feature is one of the key reasons for ParaSpace's rise. Unlike the official apestake.io staking, which requires pairing NFTs with APE, users can independently stake APE on ParaSpace, lowering the staking barrier. Additionally, compared to BendDAO, which also offers APE staking, ParaSpace has the advantage of enabling automatic compounding, attracting a large number of Ape holders to join ParaSpace.

2. Diversification of Borrowing and Lending: In terms of lending, ParaSpace supports lending not only ETH but also stablecoins and APE tokens. In terms of collateralization, in addition to blue-chip NFTs, ParaSpace offers lending services for UniV3 LP tokens.

3. Integration of DeFi and NFTFi: On ParaSpace, users can collateralize and borrow assets by bundling ERC-721 and ERC-20 tokens, breaking the barriers between NFTFi (which only allows NFT collateral) and DeFi projects (which only allow token collateral). This significantly enhances the utilization efficiency of users' on-chain assets.

4. Credit Valuation System: In typical NFT lending platforms, if a user has 10 different NFTs to collateralize for borrowing, they would need to perform 10 separate on-chain operations and manage each position individually, facing the risk of liquidation for each position. In ParaSpace, the NFTs to be collateralized are assigned a credit score (similar to Alipay's Sesame Credit). As long as the overall collateralized assets remain healthy, there will be no risk of liquidation. This greatly facilitates the risk management of user positions. When the overall collateralized assets are about to deteriorate, users can simply increase the collateral.

In terms of the founding team, ParaSpace is incubated by Para Labs, and the previously launched Parallel Finance by Para Labs was the largest lending protocol in the Polkadot ecosystem. This indicates Para Labs' strategic expansion from DeFi to NFTFi.

The founder of ParaSpace also has an impressive background. Ruan Yubo studied computer science, finance, and other majors at Boston University, the University of Pennsylvania, and Stanford University. He founded Ali Sinba Technology Company at the age of 17 and served as CEO. At the age of 21, he established Baywide Capital in Silicon Valley, managing over 60 million US dollars in assets.

In terms of funding, ParaSpace's investors include Sequoia, Coinbase Ventures, PolyChain, and other top-tier institutions. The current investment amount has not been disclosed.

Overall, the essence of the NFTFi sector is to address the issue of NFT illiquidity. Specifically focusing on NFT lending, the market size is still relatively small. The main reason is that NFTFi is a highly specialized field that requires users to have knowledge of both NFTs and DeFi. Moreover, in the current bear market where NFTs lack new scenarios, the sector is relatively subdued.

From a project perspective:

1. Currently, ParaSpace is an NFT lending protocol that is more aligned with the usage habits of DeFi users. It can be considered a product that bridges NFTFi and DeFi. In addition to blue-chip NFTs, ParaSpace also accepts various LP tokens as collateral, expanding its range of applications.

2. In its early stages, ParaSpace rapidly expanded and gained recognition by capturing hot trends and innovating. It launched at the same time as Yuga Labs' Ape staking, which introduced APE token mining incentives to stimulate early user participation. Even without its own token, ParaSpace achieved significant growth in TVL and ranked second, demonstrating its innovation and user engagement capabilities.

3. Recently, ParaSpace has encountered some significant challenges. There are severe internal disputes within the team, with public confrontations between the founder, development team, and marketing team on Twitter. Currently, the official ParaSpace account is controlled by the head of the marketing department. User attrition is significant, and there have been reports of asset outflows. The outcome of this controversy remains to be observed. However, the innovative nature of the product still holds great promise for the future.