Ads ad-300x250
  • Latest
  • Trending
BendDAO protocol trapped by illiquidity in the NFT market

BendDAO protocol trapped by illiquidity in the NFT market

August 25, 2022
How do Web3 and NFTs enrich the live music experience?

How do Web3 and NFTs enrich the live music experience?

January 23, 2023
Paxos offers $1.5 billion deal to MakerDAO for DAI collateralization

Paxos offers $1.5 billion deal to MakerDAO for DAI collateralization

January 23, 2023
SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

December 30, 2022
The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

December 22, 2022
What is flipping in crypto?

What is flipping in crypto?

December 18, 2022
BlackRock predicts an unprecedented recession in 2023

BlackRock predicts an unprecedented recession in 2023

December 10, 2022
Waltio outlines strategy to reduce its taxation on cryptocurrencies

Waltio outlines strategy to reduce its taxation on cryptocurrencies

December 1, 2022
BlockFi files for bankruptcy after FTX collapse

BlockFi files for bankruptcy after FTX collapse

November 29, 2022
Solana’s Phantom wallet opens to Ethereum and Polygon

Solana’s Phantom wallet opens to Ethereum and Polygon

November 29, 2022
Vladimir Putin predicts a blockchain-based international payment system

Vladimir Putin predicts a blockchain-based international payment system

November 28, 2022
The Shiba Inu (SHIB) soon at the World Economic Forum?

The Shiba Inu (SHIB) soon at the World Economic Forum?

November 26, 2022
Cloud mining fraud: founders of $575 million scam arrested

Cloud mining fraud: founders of $575 million scam arrested

November 23, 2022
CoinsMag
SignIn / SignUp
  • HOME
  • NEWS
    SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

    SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

    The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

    The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

    Waltio outlines strategy to reduce its taxation on cryptocurrencies

    Waltio outlines strategy to reduce its taxation on cryptocurrencies

    BlockFi files for bankruptcy after FTX collapse

    BlockFi files for bankruptcy after FTX collapse

    Solana’s Phantom wallet opens to Ethereum and Polygon

    Solana’s Phantom wallet opens to Ethereum and Polygon

    Vladimir Putin predicts a blockchain-based international payment system

    Vladimir Putin predicts a blockchain-based international payment system

  • BLOCKCHAINS
    • All
    • Algorand
    • Avalanche
    • Bitcoin
    • BNB Chain
    • Cardano
    • Cosmos
    • Dogecoin
    • Elrond
    • Ethereum
    • Monero
    • Polkadot
    • Polygon
    • Ripple
    • Shiba Inu
    • Solana
    • Stellar
    • Ternoa
    • Terra
    • Tezos
    • Tron
    How do Web3 and NFTs enrich the live music experience?

    How do Web3 and NFTs enrich the live music experience?

    SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

    SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

    The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

    The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

    What is flipping in crypto?

    What is flipping in crypto?

    Waltio outlines strategy to reduce its taxation on cryptocurrencies

    Waltio outlines strategy to reduce its taxation on cryptocurrencies

  • DEFI
    Paxos offers $1.5 billion deal to MakerDAO for DAI collateralization

    Paxos offers $1.5 billion deal to MakerDAO for DAI collateralization

    BlackRock predicts an unprecedented recession in 2023

    BlackRock predicts an unprecedented recession in 2023

    Free crypto / referral codes

    This (other) billionaire, who prefers Dogecoin to Bitcoin

    This (other) billionaire, who prefers Dogecoin to Bitcoin

    Google and the king of crypto oracles Chainlink (LINK) unveil their joint project

    Google and the king of crypto oracles Chainlink (LINK) unveil their joint project

    The Bitcoin (BTC) hashrate is on the rise again

    The Bitcoin (BTC) hashrate is on the rise again

    Burger King accepts Dogecoin (DOGE) in Brazil… for dog food

    Burger King accepts Dogecoin (DOGE) in Brazil… for dog food

    791 bitcoins bought for $5 9 years ago have finally come to life

    791 bitcoins bought for $5 9 years ago have finally come to life

    Binance: the rise of the BUSD impresses

    Binance: the rise of the BUSD impresses

  • NFT
    How do Web3 and NFTs enrich the live music experience?

    How do Web3 and NFTs enrich the live music experience?

    Is Apple planning to release a movie about Sam Bankman-Fried and the FTX case?

    Is Apple planning to release a movie about Sam Bankman-Fried and the FTX case?

    In the United States, a house in NFT has just been sold for $175,000

    In the United States, a house in NFT has just been sold for $175,000

    CNN is accused of rug pull by the community after its NFT project was stopped

    CNN is accused of rug pull by the community after its NFT project was stopped

    The OpenSea marketplace lands on Avalanche (AVAX)

    The OpenSea marketplace lands on Avalanche (AVAX)

    Japan sees the future in nft and metaverse

    Japan sees the future in nft and metaverse

  • GAMES
    Square Enix partners with Oasys to develop blockchain games

    Square Enix partners with Oasys to develop blockchain games

    Epic Games gets a head start on its Steam competitor

    Epic Games gets a head start on its Steam competitor

    Do you have to be a bot to enjoy web 3 (bad) games?

    Do you have to be a bot to enjoy web 3 (bad) games?

    StepN partners with Atletico and WhaleFin for a collection of exclusive NFTs

    StepN partners with Atletico and WhaleFin for a collection of exclusive NFTs

    Crypto Gaming, an industry revolution this year?

    Crypto Gaming, an industry revolution this year?

  • METAVERSE
    Solana’s Phantom wallet opens to Ethereum and Polygon

    Solana’s Phantom wallet opens to Ethereum and Polygon

    Is Apple planning to release a movie about Sam Bankman-Fried and the FTX case?

    Is Apple planning to release a movie about Sam Bankman-Fried and the FTX case?

    World Cup in Qatar: FIFA plunges into the mawkishness

    World Cup in Qatar: FIFA plunges into the mawkishness

    The United Arab Emirates: a first “meta-nation”?

    The United Arab Emirates: a first “meta-nation”?

    At Meta, employees are forced to log into the Horizon Worlds metaverse

    At Meta, employees are forced to log into the Horizon Worlds metaverse

    No, Decentraland does not have only 38 daily active users

    No, Decentraland does not have only 38 daily active users

    Japan sees the future in nft and metaverse

    Japan sees the future in nft and metaverse

    Yuga Labs unveils its new community board in charge of the project’s evolution

    Yuga Labs unveils its new community board in charge of the project’s evolution

  • FREE CRYPTOS
  • TUTORIALS
    Buy a Ledger wallet on Amazon – Is it really secure?

    Buy a Ledger wallet on Amazon – Is it really secure?

    Odysee | EARN Lbry Credits (LBC) watching videos

    Odysee | EARN Lbry Credits (LBC) watching videos

    Web 3.0: better infrastructure needed to stop centralization

    Web 3.0: better infrastructure needed to stop centralization

    Avoiding NFTs scams: how to spot scams

    Avoiding NFTs scams: how to spot scams

    Is buying real estate in the metaverse a wise investment?

    Is buying real estate in the metaverse a wise investment?

    FOMO, the crypto investor’s worst enemy – 10 Rules to fight it

    FOMO, the crypto investor’s worst enemy – 10 Rules to fight it

No Result
View All Result
CoinsMag
No Result
View All Result

BendDAO protocol trapped by illiquidity in the NFT market

August 25, 2022
in News, NFT
BendDAO protocol trapped by illiquidity in the NFT market

Nearly $55 million worth of NFTs ready to be liquidated, but none of them find a buyer… The BendDAO protocol is facing a severe lack of liquidity in the market for non-fungible tokens (NFTs) and may have to close down.

55 million dollars of NFTs ready to be liquidated

The non-fungible token (NFT) market is currently at a standstill. Any moment now, several dozen holders of NFTs from the largest Ethereum (ETH) collections could be liquidated. Specifically, 30300 ETH (or about $50 million) are at stake in this case.

Before anything else, a question must surely be on your mind: how could an NFT be liquidated? To understand this, we need to look at BendDAO. This protocol allows for instant Ether loans of up to 85% of the floor price of the NFT deposited as collateral.

As with any decentralized lending protocol, these loans are subject to liquidation. If the floor price of the collection falls below the amount borrowed by the user, then the BendDAO protocol proceeds to a liquidation of the NFT.

It is for this exact reason that the market is currently under threat. The main collections of NFTs – including BAYC, Cryptopunks and Azuki – have lost so much popularity that their floor prices have recently plummeted. In other words, if this trend continues, several hundred NFTs are likely to be liquidated.

BendDAO admits to being in great danger

Recently, some Internet users have pointed out the bad situation in which BendDAO is currently located. Indeed, the protocol would currently face the problem of illiquidity of the NFTs market and would not be able to pay back its lenders.

Specifically, out of the thousand NFTs deposited on BendDAO as collateral, nearly 10% are in a liquidation zone. However, the protocol faces a major problem: NFTs placed in liquidation do not receive any purchase offers. In other words, it is impossible to recover the cash associated with them.

Indeed, when the floor price of the collection falls below the amount borrowed by the user, then the NFT is automatically placed on auction for 48 hours. Unfortunately, even when they are sold off, they do not find buyers, putting the protocol in an uncomfortable situation.

As a result, users who placed their Ethers in the protocol, to benefit from the very attractive returns, can no longer withdraw their funds from the protocol. While this should represent 15,000 wETH in total, only 12.5 wETH remain in the contract.

Moreover, it is the borrowers who find themselves in the most complex situation. The lack of liquidity has led to a drastic increase in interest rates, now reaching more than 100% of the borrowed value. With such high values, borrowers have no interest in paying back their positions and prefer to abandon their NFTs.

An emergency proposal to save itself?

In the wake of this, the developers of BendDAO have published a statement in which they propose emergency measures to save the protocol. This one begins as follows:

“We are sorry that we underestimated the illiquidity of NFTs in a bear market when defining the initial parameters of the protocol.”

The first proposal would be to lower the maximum borrowing threshold to 70% of the collateral value, down from 85% in the current system. This would lead to healthier and less risky positions. Second, the developers want to reduce the period during which liquidating NFTs are auctioned from 48 hours to just 4 hours.

Finally, the protocol wants to remove the rule that stipulated that bids made during this auction period could not be lower than 95% of the floor price of the corresponding NFT collection. A proposal that means that the protocol is ready to sell the NFTs of its users in order to recover liquidity.

In conclusion, the fall of the NFTs market has initiated a downward spiral that has completely defeated the system on which BendDAO was based, dragging in its fall lenders looking for too attractive returns.

ShareTweetPinSendShareSend
Previous Post

Hackers compromise the security of thousands of BTC ATMs

Next Post

MasterCard partners with Binance to bring cryptocurrencies to 90 million businesses

Related Posts

How do Web3 and NFTs enrich the live music experience?
Bitcoin

How do Web3 and NFTs enrich the live music experience?

January 23, 2023
599
SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?
News

SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

December 30, 2022
2.3k
The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000
Bitcoin

The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

December 22, 2022
2.1k

Popular news

  • How do Web3 and NFTs enrich the live music experience?

    How do Web3 and NFTs enrich the live music experience?

    0 shares
    Share 0 Tweet 0
  • Paxos offers $1.5 billion deal to MakerDAO for DAI collateralization

    0 shares
    Share 0 Tweet 0
  • Free crypto / referral codes

    0 shares
    Share 0 Tweet 0
  • SOL down 96.5% since its ATH: Will the Solana blockchain survive FTX?

    0 shares
    Share 0 Tweet 0
  • The Human Rights Foundation funds the Bitcoin ecosystem (BTC) with $325,000

    0 shares
    Share 0 Tweet 0

Categories

  • Privacy Policy

© 2022 - CoinsMag

No Result
View All Result
  • HOME
  • NEWS
  • BLOCKCHAINS
  • DEFI
  • NFT
  • GAMES
  • METAVERSE
  • FREE CRYPTOS
  • TUTORIALS

© 2022 - CoinsMag

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
Ads Blocker Image Powered by Code Help Pro

Ads Blocker Detected!!!

We have detected that you are using extensions to block ads. Please support us by disabling these ads blocker.