⚡️NFT prices drop, not only causing losses for their holders but also pushing NFT liquidity protocols closer to bankruptcy risk
The question is "If this Black swap event happens, which will be impacted most?
The question is "If this Black swap event happens, which will be impacted most?
1/
Recently, we heard a lot about #BendDAO the first decentralized peer-to-pool-based NFT liquidity protocol
NFT holders are able to borrow ETH through the lending pool using NFTs as collateral instantly, while depositors provide ETH liquidity to earn interest
Recently, we heard a lot about #BendDAO the first decentralized peer-to-pool-based NFT liquidity protocol
NFT holders are able to borrow ETH through the lending pool using NFTs as collateral instantly, while depositors provide ETH liquidity to earn interest
2/
Its working mechanism is quite easy (deposit NFT - borrow ETH - pay interest)
- You get a loan from 30%-40% based on your collateralized NFT's floor value
- You may pay a 60%-70% down payment depending on the actual price, to buy a bluechip NFT from major NFT marketplaces
Its working mechanism is quite easy (deposit NFT - borrow ETH - pay interest)
- You get a loan from 30%-40% based on your collateralized NFT's floor value
- You may pay a 60%-70% down payment depending on the actual price, to buy a bluechip NFT from major NFT marketplaces
3/
The protocol will track your loan via Health Factor (HF)
If your loan's HF falls below 1, your NFT is put up for a 48-hour auction and sold to the highest bidder if you don't repay the loan in time.
The protocol will track your loan via Health Factor (HF)
If your loan's HF falls below 1, your NFT is put up for a 48-hour auction and sold to the highest bidder if you don't repay the loan in time.
4/
If your HF is below 1.2, your loan is in a dangerous zone.
(You can see below so many top NFTs are in liquidation risk now)
benddao.xyz/app/auction/he…
If your HF is below 1.2, your loan is in a dangerous zone.
(You can see below so many top NFTs are in liquidation risk now)
benddao.xyz/app/auction/he…
5/
One of the reasons causing this bad situation maybe the dropping of NFT price recently. This also means lack of NFT liquidation.
So, borrower cannot sell their #NFTs for repaying loans.
One of the reasons causing this bad situation maybe the dropping of NFT price recently. This also means lack of NFT liquidation.
So, borrower cannot sell their #NFTs for repaying loans.
7/
- Liquidation Trigger's Health Factor will increase from 1 -> 1.39 (More NFTs auctions)
- Auction Period reduce from 48 hours to 4 hours (less repayment time for the borrower)
- Liquidation Trigger's Health Factor will increase from 1 -> 1.39 (More NFTs auctions)
- Auction Period reduce from 48 hours to 4 hours (less repayment time for the borrower)
8/
- The gap between the floor, and the starting bid price will be much wider than it was before - up to 20% (This led to a stockpile of inactive auctions)
If this proposal is passed, we'll all have a NFTs black Friday in the next month
- The gap between the floor, and the starting bid price will be much wider than it was before - up to 20% (This led to a stockpile of inactive auctions)
If this proposal is passed, we'll all have a NFTs black Friday in the next month
9/
It's even worse when 2.2% of BAYC supply and 1.34% of MAYC supply are currently in the BendDAO wallet
This can cause a domino effect on the whole NFT Market and a bit on Crypto I hope
It's even worse when 2.2% of BAYC supply and 1.34% of MAYC supply are currently in the BendDAO wallet
This can cause a domino effect on the whole NFT Market and a bit on Crypto I hope
10/
However, I still hope BendDAO can handle that not by the da** proposal above. The little sight we can find is the recently net borrow activity below (Repay > borrow)🙄
However, I still hope BendDAO can handle that not by the da** proposal above. The little sight we can find is the recently net borrow activity below (Repay > borrow)🙄
That's a wrap!
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