A Critique of BLEND's Buy Now Pay Later

As we prepare to announce the next evolution of the Wasabi Protocol, it is important to first outline the existing NFT Finance landscape and its shortcomings. Our discourse focuses on Blend, a perpetual lending protocol supporting arbitrary collateral, including NFTs, without oracle dependencies and expiries.

Blend’s strides in the NFT financing landscape are noteworthy, and we commend their innovation. However, we've identified certain aspects of their approach that, while novel, present limitations that should be addressed to enhance the efficiency and accessibility of NFT financing. This discussion aims to outline these areas, not as a critique but as an exploration of opportunities for further innovation and to illustrate how Wasabi is poised to address them.

The Challenge of Perpetual Loans

In Blend’s model, the idea of perpetual loans - those remaining open indefinitely until liquidation - might initially seem appealing. This unbounded duration ostensibly offers borrowers flexibility but simultaneously presents a hidden trap, potentially ensnaring borrowers into ceaseless debt cycles. For many borrowers, the attractiveness of a perpetual loan diminishes in the face of an inability to definitively settle their debts and regain ownership of their NFT collateral. This indicates an opportunity in the market for a new system that offers an end to the cycle, a chance for the borrower to be protected against predatory lending mechanics.

Predatory Auctions: A Risk to Borrowers

Blend's protocol employs a mechanism whereby lenders can trigger a refinancing auction if they wish to exit their positions and can do so at any time. On paper, this seems to empower the lender, but it simultaneously elevates the risk to the borrower. If the auction fails, it results in borrower liquidation, and the lender seizes the collateral. The potential of such an eventuality can lead to heightened uncertainty for borrowers, making them vulnerable to losing their cherished NFT collateral. The market calls for a mechanism that mitigates this risk, offering improved protections for borrowers. 

Lack of Transparency in Interest Rates

Blend's model promotes market-determined, fixed daily interest rates. While a market-based approach may generally be favorable, it carries the potential to saddle borrowers with less-than-ideal interest rates. In the face of fluctuating markets, fixed interest rates may not consistently reflect the fairest cost of borrowing. A palpable need exists for an approach that ensures greater transparency and fairness in determining interest rates. 

Blend additionally incentivizes low-interest lending via its points rewards program, creating a race to the bottom for lenders. Lenders who choose to maintain higher, market-level rates are hurt as higher interest rates lead to higher liquidation levels, dropping the floor prices of the assets that lenders end up holding. 


At Wasabi, we believe in the immense potential of NFT financing and have been hard at work developing a more accessible, dynamic, and transparent approach. Our upcoming product is designed to overcome these limitations and provide a new standard in NFT financing.

In our next blog post, we will outline how our unique approach addresses these issues and adds innovative solutions that will revolutionize the NFT financing landscape. We are excited to share our vision and progress with you.

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