Real-World Assets Could Revitalize Ailing NFT Lending Market

The NFT lending market, once a booming sector, is facing a severe downturn with a drastic 97% drop in volumes since early 2024. Industry analysts, particularly DappRadar, suggest that integrating real-world assets (RWAs) could be the crucial catalyst needed to revive this struggling segment of the crypto economy.

NFT Lending Market in Crisis

The NFT lending market, which enables NFT holders to secure loans against their digital assets, has experienced a dramatic decline. Volumes plummeted from a peak of approximately $1 billion in January 2024 to just $50 million by May 2025. This sharp contraction is mirrored by significant reductions in user activity, with borrower numbers decreasing by 90% and lenders by 78% since January 2024.

• Key Takeaways:NFT lending volumes down 97% from January 2024 peak.Borrower activity decreased by 90%, lender activity by 78%.Average NFT loan size dropped 71% from $22,000 in 2022 to $4,000 in May 2025.Average loan duration shortened from 40 days in 2023 to 31 days in 2024-2025.

This downturn reflects a broader slump in the NFT market, where overall trading volumes fell by 61% in the first quarter of 2025 compared to the previous year. The collapse in collateral value has directly impacted lending activity, leading to a more cautious and risk-averse environment.

Real-World Assets: A Potential Lifeline

Blockchain analytics platform DappRadar highlights real-world assets (RWAs) as a primary solution to inject stability and renewed interest into the NFT lending sector. Tokenized RWAs, such as real estate or yield-bearing assets, could provide more reliable and trusted collateral sources, addressing the volatility inherent in purely digital NFTs.

Sara Gherghelas, an analyst at DappRadar, emphasizes that for NFT lending to move beyond its current "survival mode," it requires "new catalysts." RWAs are seen as a key innovation that could unlock more stable and trustworthy collateral, attracting both borrowers and lenders back to the market.

Beyond RWAs: Smart Infrastructure and Future Outlook

While RWAs offer significant promise, DappRadar's report also points to the need for broader advancements in lending protocols. These include the development of smarter infrastructure, such as undercollateralized loans, robust credit scoring systems, and AI-driven risk matching tools. These innovations aim to make NFT lending more accessible, secure, and appealing to a wider audience.

The current landscape of NFT lending protocols has narrowed, with only a handful maintaining significant market share. The speculative "flip-for-liquidity" model that thrived during bull markets is no longer sustainable. Instead, the sector is shifting towards utility, culture, and improved design. If these changes are successfully implemented, NFT lending could find its "second wind," built on a more resilient and sustainable foundation.

Sources

• Real-world assets could revitalize dying NFT lending market: DappRadar — TradingView News, TradingView.

• The Crypto Duo Set to Transform 2025, Cointribune.

• Real-World Asset NFTs Could Rescue Collapsing NFT Lending, DappRadar Says, Crypto News Australia.

• Can Real-World Assets Rescue the NFT Lending Market?, Cryptodnes.bg.

• Real-world assets could revitalize dying NFT lending market: DappRadar, StartupNews.fyi.