The NFT lending market has collapsed to single-digit millions in total value locked (TVL), plunging to levels last seen in 2022. Data from DefiLlama shows the sector’s TVL at roughly $8.3 million today, down roughly 97% from the sector’s all-time high of more than $300 million in March 2024.

Arcade, a Pantera Capital‑backed NFT lending startup that secured $15 million in Series A in December 2021, now shows only about $300,000 in TVL, down more than 98% from its peak of $21.5 million in March 2024.

But even protocols that once seemed more resilient are feeling the pain. Blur’s lending arm, Blend, which was built in collaboration with crypto VC giant Paradigm, now has around $3 million in TVL, down more than 90% from over $115 million in early 2024.

Nicolas Lallement, co-founder of NFT Price Floor, an NFT analytics website that tracks over 1,750 collections, told The Defiant that the March 2024 peak was heavily driven by Blur’s incentives.

“Blend (Blur’s lending arm) absolutely dominated the market at the time, and its growth was heavily fueled by Blur’s farming meta. Once those incentives tapered off, Blend’s volumes and outstanding debt fell off a cliff, and the broader sector retraced with it. That’s why the chart looks like a peak followed by a crash,” Lallement said.

The market has since transitioned to a “more stable model” led by Gondi, a non-custodial peer-to-peer lending protocol for NFTs, Lallement said. He explained that the type of collateral being used has shifted, too, as Blend loans were mostly tied to profile picture NFTs and popular IP collections like Pudgy Penguins, which are highly speculative and sensitive to events.

“To me, that’s a healthy transition. NFT art behaves more like traditional collectible markets, and that stability creates better lending behavior,” Lallement explained.

Commenting on the falling TVL among lending protocols, Lallement suggested that on-chain outstanding debt would be the “best lens for understanding the NFT lending market” right now because NFT collateral “is so illiquid.”

Data compiled by Gondi on Dune shows that, despite the liquidity crunch, outstanding debt has fallen more moderately, down around 45% from $150 million in March 2024 to $83 million today, suggesting that people are still taking out loans even as total capital in the market has dropped.