BendDAO running out of funds amid fears of souring debt

NFT platform BendDAO experienced a bank run from August 19th to August 21st as over 15,000 Ethereum (ETH) were withdrawn from its contracts within 48 hours.

Etherscan data It shows that the contract currently holds only 151.52 wrapped Ethereum (approximately $235,000).

NFT liquidation concerns

BendDAO has been at the center of the news following reports that several high-quality NFT holders have borrowed against NFTs on the platform, prompting fears of liquidation circulating on cryptocurrency Twitter.

According to Double Q’s Aug. 19 Twitter thread, the liquidation could cost the space up to $55 million.

A Twitter thread from NFTStatistics states that users who lent their ETH to others were unable to withdraw their funds because there was not enough money in the BendDAO contract. According to him, the platform has lent around 15,000 ETH.

More NFTs May Land auction block Especially if the borrower is unable to repay the interest on the debt as the price floor continues to fall.

Do not bid on debt-laden NFTs

On the other hand, most NFTs that have defaulted on their loans have not seen a bid. For context, only 4 of the 17 Mutant Apes up for auction have received offers. In other collections such as Bored Ape, Doodles and CloneX, he had a total of 9 bids for 28 of his NFTs at auction.

The lack of bids is primarily due to BendDAO’s requirements. First, the offer must exceed the debt and OpenSea minimum price. Second, the bidder must lock her ETH for her 48 hours.

These two requirements have discouraged many, especially since the liability may be higher than the minimum price.

Bad debt

Meanwhile, Twitter users stressed that if the price floors of these NFTs continue to fall, BendDAO risks going into bad debt.

In such a case, a vicious cycle could occur as ETH lenders compete to withdraw, the value of the NFT falls below the debt, and the lender is unable to withdraw.

Users recommended a 1-hour timely liquidation instead of the current 48-hour window.

Bored Ape, CryptoPunk’s lowest price slide

According to data available from NFTPricefloor, Bored Ape’s lowest price is Dropped It has increased by over 13% in the last 7 days.

According to data, NFTs in the collection traded at 65.67 ETH on August 20th.

Other top collections like CryptoPunks and Mutant Ape slid 5% and 7.7% respectively.

Meanwhile, according to CoinGecko, CryptoPunks’ lowest price for NFT briefly flipped Bored Ape’s price on August 21st.

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