DeFi and CeFi have Celsius, NFT has BendDAO.
What is BendDAO?
BendDAO is a protocol for prepaid NFT purchases and NFT mortgage loan loans. Bend’s curiosity charge model will rely on the degree of LTV in the pool. With the existing utilization charge of all-around 50.seven%, the existing curiosity charges on BendDAO are all-around six% And sixteen%the Analysis of the dunes.
The utilization charge can be understood as the Loan-to-Value ratio, which signifies what percentage of the complete assets in the loan pool.
The Health Factor (HF) is the component utilised to figure out the collateral chance in Bend, and if this amount falls under one.five, the debt is classified as “Risky”, the borrower have to partially repay the debt and if the HF falls under one and the borrower fails to repay the loan inside of 48 hrs, the mortgaged NFT will be liquidated by auction.
Buyers wishing to participate in the auction can only spend 60% of the worth of the auctioned NFT perform upfront and borrow forty% from a flash loan from platforms this kind of as AAVE. This NFT task is then secured in the Bend to withdraw ETH and repay the debt from the flash loan.
BendDAO at this time only supports lending to blue-chip collections this kind of as BAYC, MAYC, Doodles, CloneX, CryptoPunks, Space Doodles, and Azuki.
Risk of collapse when the market place falters
On August 18, a Twitter account named Cirrus posted a mass liquidation chance warning thread on BendDAO.
There are at this time 32,267 ETH ($ 59,048,610) of NFTs utilised as collateral for loans on BendDAO only
For the initial time ever, a lot of of these are at major liquidation chance
A thread on the single greatest chance to the NFT market place that no one talks about
– Cirrus (@CirrusNFT) August 17, 2022
“There are at this time 32,267 ETH (equivalent to $ 59 million) of NFT assets utilised as collateral to borrow on BendDAO.
And this is the initial time these loans run the chance of remaining forced into liquidation.
The greatest time bomb in the NFT market place, but why is no one speaking about it? “
The NFT market place from May 2022 to the current has noticed a prolonged decline in trading volume, so the minimal charges of a lot of blue-chip collections this kind of as BAYC or CloneX have also dropped drastically.
To comply with Statistics from BendDAORisky payables (with HF significantly less than one.five) consist of:
- BAYC: 120 (44.twelve% of the complete mortgaged BAYC)
- MAYC: 120 (38.83% of the complete mortgaged MAYC)
- CloneX: 60 (42.25% of complete mortgaged CloneX)
- Azuki: thirty (sixteen.04% of the complete Azuki is mortgaged)
- Doodles: 26 (36.eleven% of all Doodles are mortgaged)
Looking at the statistics over, it can be noticed that the condition is not extremely great for BendDAO proper now.
Another fringe facet that confuses NFT holders is that Franklin – the hapless man who misplaced one hundred ETH simply because he “played” with the earlier domain identify ENS – borrowed extra than ten,000 ETH from BendDAO (the greatest loan under no circumstances obtained by BendDAO). current tense). But in reality, Franklin paid the principal and curiosity and acquired his 60 monkeys back.
I at this time owe ETH to BendDAO and I have 60 monkeys in my wallet. I borrowed 10245.37 ETH from them and paid it plus 9.13 complete curiosity of ETH. If I had a debt of ten,000 ETH, I would not spend off and would chill out on an island proper now. Starting with a couple of spaces now. pic.twitter.com/qEf2xInzoA
– Franklin has 59 monkeys (@franklinisbored) August 18, 2022
“I at this time owe BendDAO ETH and I have 60 APEs in my wallet. I as soon as borrowed ten,245 ETH from BendDAO but repaid it, which include curiosity of 9.13 ETH.
If ten,000 ETH had been owed to me, I would not spend it and would go to some attractive island to delight in lifestyle.
In brief, practically nothing else “.
You can refer to BendDAO’s debtor listing at this.
Since June 15, some MAYCs have been liquidated. To date, there are all-around 70 doodles on supply on Bend.
What’s the explanation?
Explaining the supply of this incident, account punk9059 (Director of Research at Evidence – the task behind Moonbirds) claimed that BendDAO really should have adjusted the HF index when the debt-to-GDP ratio enhanced in the NFT minimal price tag condition. is reducing.
According to the liquidation threshold of all-around 90% for BAYC, it is only when the minimal price tag is eleven% larger than the debt, i.e. HF = one, that the auction requires spot to liquidate the asset.
As the debt stability continues to rise but the HF stays the very same, the chance of lenders in this gloomy market place, specifically in capital markets with variable liquidity, also behaves like NFTs.
Never Fan
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