How to make money using Blur's Blend protocol?

Here are my succint thoughts on Blur’s new Blend protocol.

https://twitter.com/davincithreads/status/1653293136066621444?s=20

I have spent the last 7 days researching and testing out the best methods to make money using Blend. This article isn’t a tutorial on the protocol itself but actionable techniques that can help you to profit in your trading endeavours.

Disclaimer

This product by Blur once again favours large whales as opposed to small traders. The major winners will be experienced traders with deep liquidity to absorb the negative impacts of leverage trading.

Taking a loan against your NFTs is an extremely risky play and the potential downside is massive. Leverage on risky assets such as NFTs is very dangerous if done without proper diligence.

As we know degens will be degens so if you are determined to participate here are the 6 best strategies to generate profit:

1. Short Term Flips

2. Leverage Long

3. Buying Insurance

4. Farming Blur

5. Shorting using NFTPerp

6. Predict upcoming collections

Let’s go into further detail below:

Short Term Flips

The Buy Now Pay Later (BNPL) mechanism when used correctly can allow for cost efficient flips of “Bluechip” NFT collections. TylerD provides a great case study for this approach:

https://twitter.com/Tyler_Did_It/status/1653412643569389568?s=20

Leverage Long

If you think an NFT's floor price is going to go up, you can now also take out a leverage long position using BNPL. Here is an example:

Azuki has a floor of 15 ETH. Instead of using 15 ETH to buy 1 Azuki, you can buy 7 Azuki by putting down 15 ETH and pay the rest later.

If Azuki's floor price goes to 18 ETH. You sell the 7 Azuki you own, netting a profit of 21 ETH (assuming a 0% interest rate) rather than just a profit of 3 ETH had you purchased 1 Azuki.

Bear in mind if you are wrong and the floor price drops this also multiplies your losses.

Buying Insurance

You can buy insurance (or set a stop loss) by borrowing ETH against your NFT. This effectively acts as a call option where your downside is capped and your upside is unlimited. Let’s look at an example:

Borrow 42 ETH on your CryptoPunk (80% of floor price). 42 ETH is now your stop loss. If the floor drops below 42 ETH, you just let your loan default.

Farming Blur

1. Bid on collections with 1x listing rewards. Only 14 collections will be able to receive 2x. Most farmers will go for the collections with 2x, and the rest will suffer less making it easier and less volatile to farm Blur points.

2. If you have NFTs you are happy to hold for the long term; find friends you can trust who will accept loan terms (usually at 0%) for the express purpose of farming Blur rewards. Some unscrupulous actors and whales are already doing this by lending to themselves from multiple wallets. Remember using ETH in your Blur pool allows you to earn bidding and lending points. For maximum impact you want to provide the highest max borrow and lowest APY.

Shorting using NFTPerp

1. Shorting if the bubble pops. The top should be pretty clear (when a bunch of loans are about to get liquidated) and shorting on NFTPerp can generate substantial gains.

Predict upcoming collections

Following the announcement of their participation in the Blend protocol we saw the following price pumps:

• Milady: 2.9 ETH -> 3.8 ETH (+0.9 ETH in 4 hours)

• Azuki: 15.1 ETH -> 16.8 ETH (+1.7 ETH in 14 hours)

Expect this trend to continue. Your job is to try and determine upcoming collections before anyone else. Especially with the knowledge a new collection will be added later today.

Blur is looking to add the Blend feature to collections that have high volume. Currently these are; Beanz, Degods, MAYC, BAYC and Captainz.

1. The easiest and lowest risk approach is to set a notification on the Blur Twitter account. Blur usually makes announcements at 5pm UTC. Monitor Twitter closely and be the first to react to the new collection news. Look to flip within the first 4 – 12 hours for low risk profit.

2. For a higher risk approach you can couple this with the Leverage Long strategy to multiply your potential earnings.

Summary

These are the best strategies I have come across to maximise profits using Blend. Please remember to only ever participate with money you are willing to lose. The NFT markets are extremely volatile with singular events having major impacts on project valuations. Drop your thoughts and future questions in the comments and I will answer the most interesting ones in the next edition of Davinci Letters.