All the Details About BAYC And BendDAO Liquidation Issue! From the threat of mass liquidation possibly nuking the floor price of BAYC, to possibly being unable to pay back their lenders, here are the latest updates on the BendDAO situation
Threat Of Mass BAYC Liquidation
Earlier this month, it was revealed that a number of NFTs are in threat of being liquidated after being used as collateral on the Ethereum lending platform, BendDAO. In fact, it was also revealed that there is an estimated $55 million worth of NFTs that have been deposited into the BendDAO platform with many of which were reportedly at risk of liquidation.
There are currently 32,267 ETH ($59,048,610) worth of NFTs being used as collateral for loans on BendDAO alone
For the first time ever, a lot of these are at serious peril of liquidation
A thread on the single biggest risk to the NFT market that nobody is talking about
— Cirrus (@CirrusNFT) August 17, 2022
Many of these NFTs used as collateral were said to be Bored Ape Yacht Club (BAYC) NFTs, with an estimated 272 Bored Apes, representing almost 3% of the entire BAYC collection, tied to the BendDAO platform.
With multiple people possibly unable to pay their loans back to BendDAO due to the current bear market, their Bored Ape NFTs are at risk of being mass liquidated, which could have a detrimental effect to the floor price of the BAYC collection as a whole.
BendDAO Unable To Liquidate
However, another problem has risen since the BendDAO platform began attempting to liquidate these Bored Ape NFTs. Despite already having listed some these BAYC NFTs on marketplaces to sell, many were unable to receive any bids at all.
This has caused more problems as the lending platform now has run out of Wrapped Ether (wETH) in its contract. At the time of writing, it’s reported that BendDAO only has around 15 WETH to pay to its lenders
While you were asleep the BendDAO bank run finally happened
15 wETH ($25,081) left in the wallet that had 18,000 ETH ($29,160,000) in it just 48 hours ago
Still 14,500 wETH owed to lenders….
Absolute shitshow pic.twitter.com/RKkdqVAVIf
— Cirrus (@CirrusNFT) August 21, 2022
This means that those who have borrowed ETH from the BendDAO platform will now need to pay 100% interest on the ETH that they borrowed so that the platform will be able to pay back the 15,000 ETH that they owe to the ETH lenders.
The BendDAO platform founders have since revealed that they are working on a proposal to improve the protocol.
“Writing a proposal to improve the protocol, including some parameters change, will post in the forum today and will effect 24hours after voting, hope that WAGMI.” Co-Founder @CodeInCoffee said on his Twitter.