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NFT lending volume surged to its highest level in two months over the weekend, with $3.5M worth of nonfungibles changing hands on July 3 via NFTfi, a marketplace for loans collateralized by NFTs.
The activity was spotted by Richard Chen, a general partner at crypto investment firm 1confirmation.
Chen dived deep into the data, discovering that $3.16M was borrowed by just two whales using NFTfi on July 3. The whales borrowed 21,500 DAI against each of their 147 combined CryptoPunks, with metaverse interest rate protocol MetaStreet acting as the sole lender for the loans.
Some twitter users asserted that the two whales could be the same person. “You sure this is 2 persons? These 2 collections have a very similar pattern,” commented Tschuuuuly. “That’s the same person,” added hicryptopete.
The spike in activity has sparked speculation that NFTfi may be preparing to launch an airdrop for users. 
Andrew T of wallet analytics firm Nansen tweeted that he recently wrote about “an unannounced raise NFTfi has been doing for the past three months” that has garnered roughly $1M worth of USDC for the platform. “Between that and this possible airdrop farming, could be a token on the horizon,” he said.
Other respondents are skeptical, with IAmThatLemon suggesting the activity is indicative of money laundering.
NFTfi is emerging as an early leader in the nascent lending sector for nonfungibles. The protocol facilitated 13,402 NFTs loans worth $217.6M since launching in 2020. 
NFTfi continued to gather momentum in early 2022 despite the broader crypto market downtrend, with the platform processing a record $48.7M worth of loans in April. The protocol also hosted a record number of users in May, with 589 borrowers and 208 lenders active on the platform in one month.
But volume receded over the past two months as capitulation gripped digital asset investors, with $15.8M worth of loans being taken out during the month of June.
The platform caters towards short-term lending activity, with loans lasting 33 days on average and yielding about 4% for borrowers — the equivalent of 42% annually. Bored Apes and CryptoPunks have collateralized about a third of loans taken out on the platform all-time.
While NFTfi is dominating the nonfungible lending sector with $172M worth of loans facilitated in 2022, it is beginning to face competition from rival protocols.
Arcade, an NFT lending platform launched by a third-generation Texas pawnbroker, raised $15M in a Series A funding round in December. Arcade’s founder says the platform has hosted $25M worth of loans since going live in January.
Drops, another rival NFT lending protocol, has also enabled $7M worth of nonfungible-backed loans since launching in July 2021.
In a recent appearance on The Defiant Podcast, prolific NFT collector, Gmoney, argued that despite the recent proliferation of protocols enabling peer-to-peer loans backed by NFTs, the next frontier for NFT lending will be “peer-to-protocol lending.”

“At the moment, there’s no peer-to-protocol lending, it’s more peer-to-peer. I think the issue that people are trying to solve is how do you make it a peer-to-protocol lending environment… I know a lot of teams are trying to solve this problem,” he said.
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