NFT lending protocol NFTfi has announced that it would be shutting down its operations in by August 31, 2026. Announcing its decision, NFTfi cited an unsustainable market contraction as the reason why keeping its operations on no longer looked like a feasible option.
Launched in 2020, NFTfi started letting NFT owners borrow capital against their holdings. This unlocked instant liquidity for NFT investors without having them to sell their holdings. The platform was among pioneers in such a service at the time.
“Since then, over $737 million in loan volume has been transacted across more than 82,000 peer-to-peer loans and 6,200 wallets, with nearly $17 million of interest distributed to l enders,” NFTfi said.
In the last three years, however, the NFT market nosedived. It failed to hold the hype against other blockchain-based digital assets like Bitcoin. As per recent reports, the market cap of the NFT sector has fallen below $1.5 billion — clocking a 90 percent drop from its peak of over $17 billion in early 2022.
NFTfi, in its announcement said, the current NFT market situation can no longer fuel the cost of running a protocol like its lending service.
“Potential revenue no longer covers operating costs. While we remain bullish on NFTs over the long term — including as the category grows to represent new kinds of assets and utility on-chain — the timeline to that future remains uncertain,” the announcement blog said. “At this point, NFTfi cannot continue to subsidize the protocol against that uncertainty.”
In the coming days, the platform will stop issuing new loans. While active loans will continue to mature under their original terms, existing loans can be refinanced until July 31, with each cycle capped at a maximum duration of 30 days. Loan borrowers have until August 31 to repay their debts.
“If a borrower defaults, the standard liquidation process applies and you can claim the collateral NFT as you always have,” the announcement added.
NFTs or Non-fungible tokens were all the rage back in between 2021 and 2022. These were essentially the blockchain representation of art, sports collectibles, cartoons, brands, and famous personalities.
Fans and art collectors would purchase these digital collectibles as an investment or to spruce up their metaverse spaces.
NFTs had become popular among brands and event advertisers that were looking to tap newer audiences. Celebrities like Snoop Dogg, Justin Beiber, and Jimmy Fallon among others were big into NFTs. In December 2021, Pak’s Merge was sold for $91.8 million — marking the most expensive NFT sale ever.
Now that the market has remained dormant for over three years, most of the NFTs that once retailed for hundreds of thousands of dollars now stand next to worthless.
Earlier in March, NFT marketplace Magic Eden also started winding down its NFT operations in a move to pivot towards online casino and sportsbook platform, Dicey. In the first week of June, Binance also wrapped up its NFT platform owing to the massive fall in NFT sales.
