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BendDAO Liquidates Assets: Dont Miss Blue-chip NFT Bargains

Fears are spreading in the NFT community, as BendDAO, a crypto mortgage lender using NFTs as collateral, faces liquidation . Now, there’s talk of wide-spread fire-sales of Bored Ape Yacht Club NFTs. However, theres more to the program than that. Apparently, theres a collection of Doodles, Azuki and RTFKT NFTs too.

Just what exactly is going on with BendDAO, and how will you obtain a Blue-chip bargain?

benddao bargains nft fire sale loan
BendDAO is liquidating nonetheless it could help get rich

What’s BendDAO?

BendDAO is really a lending system by which it is possible to borrow ETH making use of your Blue-chip NFTs as collateral. In order who owns a Blue-chip NFT, it is possible to access ETH instantly. Then, those lending ETH get instant interest. Its basically a win-win for users. To avoid losses due to the marketplace fluctuations, the borrower could have a 48-hour liquidation protection period to settle the loan.

How come BendDAO liquidating assets?

Liquidation is going on for some different reasons. Firstly, because of the dropping floor-prices of some Blue-chip NFTS. At these times, health factor of the NFT-backed loan is dropping below 1. For instance taking out financing when BAYC is 100eth, it is possible to instantly borrow 40eth. If the floor price of BAYC drops to 44eth, this triggers the 48 hour liquidation protocol. That is to make sure that the lending company recoups their loan plus interest. We’ve seen this happening this week with BAYC #533 (used as collateral against a 66.95 ETH loan) being listed for auction.

Secondly, BendDAO has found itself in a hard situation. They will have only 12.8 WETH left within their contract. Therefore, those provided loans via BendDAO cannot retrieve their money. There’s approximately 13,000 ETH lent at time of writing, therefore the ETH left within their contract is leaner compared to the total loaned ETH. Because of this, the debt contrary to the NFTs is quickly rising.

BendDAO reserves stats
Stats of BendDAO reserve at time of writing

How will you grab a bargain Blue-chip NFT?

With the proposed changes there may be some amazing deals on Blue-chip NFTs coming on the the following month. If the proposal passes, they’ll auction off plenty of previously unlisted NFTs. By reducing the threshold for asset liquidation, BendDAO is making certain NFTs could be auctioned off prior to the floor drops to catastrophic levels.

If you need to watch the auction activity and make an effort to grab a Blue-chip bargain, monitor the BendDAO Loans in Auction page to begin with bidding.

Think about the defaulted NFTs?

Well, they are up for auction, however the most NFTs auctioned don’t have any bids. Only 4 of the 17 MAYC currently up for auction have bids. The bids lack because BendDAO requires bids to be above the quantity of debt AND above the OpenSea floor price. Debt could be greater than floor, therefore most people usually do not need it them. Additionally, to open a bid you need to secure your eth for 48 hours, which is really a risk most are not ready to take.

So, with no-one bidding on defaulted NFT loans, the DAO is left holding them with an increased debt than they’re currently worth. The DAO must discover a way to retrieve the ETH from these NFTs to cover lenders.

To mitigate this, BendDAO is proposing changes to lending protocol. One proposed change is that auctions can last only 4 hours instead of 48, eliminating the chance of experiencing your ETH tangled up for just two days. Another change is that the minimum starting bid may be the total debt on the NFT instead of 95% of the ground price. Which means that the gap between your floor and starting price will undoubtedly be much bigger, incentivising more bidders.

BendDAO Twitter banner
Twitter banner of the BendDAO official account

To conclude, BendDAO is giving us a lesson on finding your way through the bear market in the bull market. Although it may feel safe using NFTs as collateral in a bull market, the model behind many NFT creditors remain too primitive. That said, many in the NFT community want forward to the sale. In the end, who doesnt love a bargain blue-chip NFT?

All investment/financial opinions expressed by aren’t recommendations.

This short article is educational material.

As always, make your personal research before making any type of investment.

Koko is really a writer originally from Wales, now surviving in Australia. Koko is inspired by the creativity and innovation of Web3, and contains previously worked within NFT born brands. With passions lying in both creativity and mental-wellness, Koko can be a professional Therapist, and is captivated by the area between which self-love and creativity meet.

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