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.
gm.
With the floor down to 72, the auction for the first BAYC liquidation of BendDAO has started
68.4e starting bid…
Any taker , or will this be the first bad dominoes on the platform? pic.twitter.com/7qxsIi661e
— Cirrus (@CirrusNFT) August 18, 2022
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.
Currently BendDAO alone has 32,267 ETH ($59,048,610) worth of NFTs are used as collateral for loans
For the first time ever, many of them are in serious danger of liquidation
The biggest thing about the NFT market A thread at risk that no one is talking about
— Cirrus (@CirrusNFT) August 17, 2022
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.
Another debtor who seems to be getting attention is Franklin, who borrowed 10,000 ETH against 60 Bored Ape. While many were concerned that their liquidation could have a huge impact on the market, he clarified that he had already repaid his loan.
I currently owe BendDAO 0 ETH in my wallet There are 60 orangutans. I borrowed 10245.37 ETH from them and have paid it off, plus a total interest of 9.13 ETH. If I owe 10k ETH, I won’t pay it back and will now shudder on the island. Now start a short space. pic.twitter.com/qEf2xInzoA
— Franklin has 60 apes (@franklinisbored) August 18, 2022
However, concerns remain with many comparing the possibility of NFT liquidation to the debacle of Celsius or Voyager.
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