- NFTfi-protocol BendDAO faced a lack of liquidity
- The platform intends to liquidate some of the tokens from the collateral
- Under the threat of sale were NFT BAYC worth more than $5 million
- This threatens the entire token market
the first rank protocol BendDAO is facing a liquidity crisis. The platform issues loans secured by NFTs. Due to the fall in the minimum price of the tokens, some of this collateral is in danger of being forced into liquidation. In particular, these are several dozen tokens from the BAYC collection.
What is BendDAO?
This is the so-called NFTfi protocol. Its goal is to commercialize the sphere of tokens by introducing them into financial flows. The platform enables users to earn income for the provided liquidity.
Besides, BendDAO issues loans secured by NFTs. The owner can leave the token as collateral and get the loan he needs.
What happens to the protocol?
The drop in the threshold price for the so-called “blue chips” has led to a reduction in the liquidity of the platform itself. Because of this, part of the collateral that is stored on the site is under the threat of forced liquidation.
A user under the nickname Cirru stated that “a horrendous number” of BAYC NFTs were “on the brink” of being sold. This was later confirmed by collector Pete Fogden. BendDAO has pledged tokens in the amount of 05 million dollars.
197 of which is NFT BAYC, i.e. 2.7% of the entire collection. Approximately 45 tokens from this category are as close as possible to liquidation. We are talking about the amount of $ 5.3 million.
The Protocol Administration stated the following:
“Short-term fluctuations in the price of blue chips are normal. Consensus on these tokens was not reached in a day, and it will not be canceled anytime soon.”
Despite this, experts believe that the risk of liquidation of these tokens is extremely high. In this case, the market will experience a cascade effect.
There is a risk that this will cause prices to fall first on BAYC, and then and other blue chips. Not to mention that the vote of confidence in NFTfi will be undermined, and the demand for NFT will fall.
In the most pessimistic scenario « “sale” of tokens will lead to an outflow of capital, which will have disastrous consequences. See also: the daily income of the GameStop marketplace has decreased to 4 thousand dollars. This is partly due to problems in the industry.