Introduction
In the fast-changing Web3 ecosystem, a new trend is gaining momentum on NFTfi – the increasing popularity of long-term NFT-backed loans. Starting in early 2023, there has been a noticeable rise in 365-day loans on the platform.
Today, loans with terms of 180 days or longer now account for about 5% of monthly loan activity on NFTfi. This shift in user behavior points to a more advanced understanding of digital asset value.
Some NFT collections, in particular, are emerging as preferred collateral options due to their historical importance and reliability. Collections such as Autoglyphs, CryptoPunks, and Chromie Squiggles are not only seen as iconic but have also helped define technical and artistic standards in the NFT space.
Even when other popular NFTs have experienced significant price crashes, these collections have proven to be more stable, making them attractive assets for long-term lending.
Lenders appear more comfortable participating in these longer-term deals, earning steady interest and potentially gaining access to premium NFTs at a lower price if a borrower fails to repay.
Meanwhile, borrowers are using long-term loans to unlock more financial flexibility.
However, this brings up an important question: how exactly are borrowers using the funds they get from these NFT-backed loans?
Following a recent protocol upgrade, NFTfi now supports loan terms as long as five years. Since then, several Chromie Squiggles have already been used to secure two-year loans.
This article explores borrower behavior by classifying how long-term NFT loans are being spent and offering real on-chain examples of these activities.
Types of Spending with NFT-Backed Loans
Based on feedback from users and blockchain data, NFTfi has identified four key spending categories that borrowers fall into.
Most borrowers don’t stick to just one category—instead, they often combine several strategies to make the most of the funds.
For instance, someone might use a long-term loan to pay off other debts, purchase more NFTs, and then convert the remaining funds into stablecoins for off-chain use.
1. On-Chain Spending
This refers to spending within the crypto ecosystem, such as buying more NFTs or investing in other digital assets.
Borrowers who engage in this type of spending are often trying to increase the overall efficiency of their portfolio by reinvesting in assets they believe will increase in value in the short or medium term.
2. Off-Chain Spending
Off-chain spending involves moving crypto assets to centralized exchanges. While it’s hard to track exactly how the money is spent once off-chain, many users use these loans to cover real-world expenses.
These could include things like buying property, paying bills, or covering any costs that can’t be paid directly with cryptocurrency.
3. Loan Repayments
A common use of borrowed capital is to refinance or pay off other loans. Borrowers may look for lower interest rates or longer terms and use the new loan to settle previous obligations.
This is a strategic move aimed at lowering overall interest costs, managing repayment timelines better, or simply consolidating debts into a more manageable structure.
4. Yield Opportunities
Some borrowers take the borrowed funds and invest them into DeFi yield-generating platforms. This could involve providing liquidity on decentralized exchanges or lending the money out at a higher interest rate than they’re paying. The goal here is to earn a profit by making the loaned money work harder than the cost of borrowing it.
Who’s Taking Out Long-Term Loans?
To better understand borrower behavior, let’s look at three real-world examples from the blockchain. Each one fits a general borrower profile: the art buyer, the off-chain spender, and the yield-focused investor. Though different in strategy, all three show how long-term loans offer flexibility and financial control.
The Art Buyer
A borrower recently secured a massive 365-day loan worth 130 ETH using a rare XCOPY 1/1 NFT titled NGMI as collateral.
This particular piece is estimated to be worth over 200 ETH. Once the funds were received, the borrower repaid more than 100 smaller loans and renegotiated several ongoing loans on NFTfi.
Afterwards, they went on an NFT buying spree, adding artworks such as Max Pain, Cryptoadz, Where My Vans Go, and two 6529 memes to their collection.
This case shows a borrower using a long-term loan strategically—not only to manage debt but also to reinvest in digital art.
The predictability and size of the long-term loan gave them the freedom to handle multiple tasks at once: reducing debt, extending loan terms, and acquiring valuable new assets.
The Off-Chain Spender
Tony Herrera, a known user on NFTfi, has used the platform to support real-world investment goals—specifically in real estate. He has previously borrowed against his CryptoPunks to fund the purchase of two commercial buildings and one residential property.
In his most recent activity, Herrera took out two long-term loans using two CryptoPunks as collateral, securing 70 ETH over 365 days.
With this capital, he paid off a 25 ETH loan, then converted the rest into USDC. He eventually moved $70,000 off-chain via Coinbase, possibly to fund another property investment.
Herrera’s story demonstrates how NFT-backed loans are becoming a real alternative to traditional financing options.
Like the art buyer, he used the loan to manage existing obligations. However, unlike the on-chain spender, his end goal was clearly tied to real-world spending and investments outside the blockchain.
The Yield Seeker
Another borrower recently locked in a 90-day loan of 100 ETH using an Autoglyph, currently valued at around 205 ETH, as collateral. Even though this loan was shorter than the others, it still allowed enough time to pursue a smart investment strategy.
The borrower used half of the loan (50 ETH) to buy $RLB, the native token of Rollbit. Then, they combined the $RLB and ETH to provide liquidity on Uniswap v3, targeting a trading pair that had been popular and active in recent months.
This is a classic example of a borrower using their loan not for consumption or debt repayment, but for yield generation.
By acting quickly within a favorable market environment, they took advantage of DeFi tools to potentially earn more than the cost of their loan. If the borrower defaults, the lender gets to claim the Autoglyph—potentially acquiring a high-value asset for almost half its worth.
Conclusion
NFT-backed loans are being used for a variety of purposes—from covering off-chain living expenses to buying more art or chasing returns in DeFi. As the trend toward long-term loans continues, platforms like NFTfi are providing borrowers with the flexibility they need to manage their portfolios more effectively.
Borrowers no longer need to worry about short-term repayment deadlines. Instead, they can use their NFTs to secure large, long-duration loans that allow them to invest, consolidate debt, or even fund real-world purchases.
Most long-term loan users are already familiar with NFT lending protocols and use them as part of a broader financial strategy. They recognize the potential of NFTs not just as collectibles but as valuable, functional assets.
With over $492 million in total borrow volume and the most proven smart contracts in NFT lending, NFTfi remains at the forefront of this growing space.
As more users explore long-term loans and innovative financial strategies, NFTfi continues to evolve, offering reliable support for both lenders and borrowers.
If you’re new to NFTfi, be sure to watch the explainer video below and explore the beginner’s guide to borrowing on the platform.
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