Fears of liquidation have gripped the non-fungible token market following the emergence of several bored and mutant ape holders borrowing their NFTs on BendDAO.
The news broke on Twitter after users shared screenshots of Bored Ape NFTs available for auction.
Bored Ape now has a reserve price of 72 ETH, BAYC #533 was used as collateral for a 66.95 ETH loan, now listed for auction.
Although no one has bid for NFT yet, it seems that several other boring ape-holders have borrowed about 60 So does the ETH protocol.
BendDAO is one of the popular peer-to-peer NFTFi protocols that allows people to borrow ETH at the floor price of the NFT. Typically, NFT holders can borrow up to 40% of the reserve price.
Overall, the value of NFTs used as collateral on BendDAO is over $59 million. There are a total of 272 BAYCs on the platform, or 2.8% of the collection is collateral, along with 1.6% of the Mutant Apes collection.
Due to the low health factor of several of these NFTs, the risk of liquidation is high. 45 BAYCs are in danger zone, a health factor below 1.2, indicating they are about to be auctioned.
Liquidation may further reduce BAYC floor price
Worry if these BAYC is auctioned, which may further drive down the reserve price, triggering liquidations in the massive NFT market.
However, many still worry about the possibility of NFT liquidation similar to the debacle of Celsius or Voyager.
There have been a few mutant ape auctions so far, but there may be more if the debtor doesn’t repay the loan and is liquidated.
BendDAO co-founder is also close to liquidation
has Ironically, the co-founder of BendDAO itself is one of the boring ape holders dangerously close to being auctioned off.