The blockchain analysis platform DappRadar indicates that the combination of RWA and NFTs is one of the key catalysts that could reignite the sluggish NFT lending industry, which is suffering from a collapse in trading volume and user activity.
The trading volume of the NFT lending market, which allows NFT holders to obtain loans by using their tokens as collateral, has plummeted 97% from a peak of about $1 billion in January 2024 to $50 million in May, according to DappRadar analyst Sara Gherghelas in a report on May 27.
Gherghelas stated that to move NFT lending "beyond survival mode," it needs "new catalysts" to revitalize the industry, such as real-world asset NFTs, like tokenized real estate or income-generating assets, which can unlock more stable and reliable sources of collateral.
"So far, 2025 has not provided compelling reasons for a rebound in NFT lending," she noted. "Although the infrastructure remains in place and platforms stay active, overall activity in the industry has generally slowed."
Borrowers and lending activities have been severely impacted in the NFT lending industry. Source: DappRadar
"Currently, the industry seems to be in a wait-and-see mode, waiting for market recovery or new use cases to reignite market interest."
Gherghelas added that other potential catalysts for revitalizing NFT lending include tools that simplify the lending process for NFT holders, as well as "smart infrastructure" that protocols should create, such as low collateral loans, credit scoring, and AI risk-matching systems.
The report further noted that borrower activity has decreased by 90% since January of last year, and the number of willing lenders has dropped by 78%.
The average NFT loan size has also fallen from a peak of $22,000 in 2022 to $4,000 in May of this year, a year-on-year decline of 71%.
Gherghelas stated that this shift "indicates that either users are borrowing against lower-value assets or becoming more conservative in their use of leverage."
The total trading volume and market activity of NFT lending have significantly declined from historical highs in recent years. Source: DappRadar
The average loan term has also shortened; after reaching an average of about 40 days in 2023, it has remained around 31 days throughout 2024 and early 2025.
Gherghelas suggested that this may mean "loans are being accessed more frequently but for shorter terms, perhaps indicating more tactical liquidity operations."
The slowdown in NFT lending activity is partly due to the overall decline of the NFT market, with first-quarter trading volume dropping 61% year-on-year from $4.1 billion to $1.5 billion.
"As collateral values collapse, lending activity naturally decreases," Gherghelas said. "While a few platforms have managed to maintain or regain momentum, these are just exceptions and cannot uplift the entire industry."
The protocol ecosystem has also noticeably shrunk, with a limited number of active NFT lending applications, as only eight protocols hold a meaningful market share.
"The 'flip-to-acquire liquidity' model that worked during bull markets is not suitable for the current more cautious, risk-averse environment. But this does not mean the NFT lending market has come to an end; it is simply shifting its development direction," Gherghelas analyzed.
"Platforms are diversifying, use cases are constantly changing, and collateral preferences are also evolving. If the next wave of development is built on practicality, cultural value, and better design, NFT lending may welcome a second spring—a more sustainable phase of development."
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Original article: “DappRadar: Real World Assets (RWA) May Revitalize the Dying NFT Lending Market”
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