The owners of Bored Ape Yacht Club (BAYC) NFT are having a lot of fun right now, as a potential liquidation cascade hangs over NFT BendDAO’s liquidity pool.
BAYC holders who placed their NFTs on BendDAO in exchange for $ETH are now at risk of being liquidated with a upside rate of 1.01, according to data collected from BendDAO.
DoubleQ, founder of DoubleStudio’s Web3 launch pad, claims on Twitter that this liquidation of the Bored Ape Yacht Club loan could wipe out the entire NFT market.
BendDao is an NFT lending protocol that offers 30-40% of the minimum NFT price as loans. Usually, the protocol is used by market participants who need liquidity in ETH, but who do not want to sell their NFTs. However, in cases where the health factor is lower than 1, the NFT will be eliminated, as shown in the following example.
Currently, there are 20 BAYCs with health factors below 1.1, which could result in the elimination of NFT worth about $55 million.
The volume of Opensea NFT is currently at its lowest level in 12 months, meaning that the volume will not be enough to save these NFTs from liquidation. Borrowers will have 48 hours to repay the loans or their collateral will be liquidated.
Author: Anton Zaitsev, Analyst Freedman Club Crypto News
#Potential #liquidation #BAYC #decline #NFT #market