NFT platform BendDAO experienced a bank run from August 19th to August 21st as over 15,000 Ethereum (ETH) were withdrawn from its contracts within 48 hours.
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The BendDAO Bank Run Has Finally Happened While You Were Sleeping
15 wETH ($25,081) remains in a wallet that had 18,000 ETH ($29,160,000) just 48 hours ago
14,500 wETH still owes lenders….
absolute shit show pic.twitter.com/RKkdqVAVIf
— Cirrus (@CirrusNFT) August 21, 2022
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.
Co-founder of Benddao
About to be liquidated by Benddao
😂😂😂 pic.twitter.com/DvrNLI7lcc
— Eric 🦦 (@EB7) August 19, 2022
According to Double Q’s Aug. 19 Twitter thread, the liquidation could cost the space up to $55 million.
1/ how @BendDAO And Liquidation of BAYC Loans Could Destroy the Entire NFT Market
30,300 ETH ($55m) worth of NFTs on line
Must-read threads to protect yourself 🧵
— doubleQ (@xDoubleQ) August 19, 2022
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.
OK. Long thread on BendDAO status:
1) You are short of ETH. He only has 12.5 WETH on the contract.
2) What does this mean? People who lend money to others through BendDAO to buy NFTs with leverage cannot withdraw their money. About 15,000 ETH have been lent.(1/9)
—NFTStatistics.eth (@punk9059) August 21, 2022
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.
5) What does that mean for my NFT?
it depends.Most defaulted NFTs currently have no bids
13/17 May
5/9 Bake
8/11 Clone X
6/8 graffiti👆 Total number of NFTs in auction without bids / Total number of NFTs in auction (e.g. 4 MAYCs with bids)
(3/9)
—NFTStatistics.eth (@punk9059) August 21, 2022
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.
7/ So it turns out that only long-term hodl liquidators are likely to bid. If no one bids and the floor price keeps going down, this becomes bad debt. @BendDAO Benddao ends up Hodling NFT. No cascading liquidations! Great news, but there is also bad news.
— TradFiWhale.eth (@TradFiWhale) August 21, 2022
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.
BREAKING: Cryptopunks Low Price Has Temporarily Flipped Bored Apes #NFTs
— CoinGecko (@coingecko) August 21, 2022
