Hak Analytics Profile picture
Aug 23 12 tweets 4 min read
⚡️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?

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

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

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.

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)

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.

To fix it, Founder of @BendDAO just made a proposal 👇👇👇

- 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)

- 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

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

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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More from @HakAnalytics

Aug 24
Staking has taken center stage over the past two years after @ethereum allowed locking up ETH since the lately 2020 for ETH 2.0

Since then we have a new category in the #Defi world named Staking as a Service with the leader being LIDO Finance Image
@ethereum In this thread, we'll have:
- Key Insights
- Lido's working mechanism
- LDO token
@ethereum 1/

👉Key Insights

Instead of depending on computational power like POW, under POS, validators lock (stake) a certain amount of the network’s native crypto-asset as collateral to create new blocks.

In return, they earn inflationary rewards and transaction fees
Read 22 tweets

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