On Monday, builders of decentralized nonfungible tokens (NFTs) borrowing and lending protocol Bend DAO proposed new emergency measures in an try and stabilize the ecosystem. The identical day, it was revealed that the challenge had simply as little as 15 wrapped Ether (wETH) price $23,715 to pay again lenders. Approximately 15,000 ETH was lent utilizing the mechanism. To save the protocol from a credit crisis, the Bend Dao dev crew prompt that the liquidation threshold for collateral can be constrained to 70% of the mortgage worth, down from 85%.
Next, the public sale interval for NFTs on its platform can be decreased from 48 to 4 hours. Then, the requirement for the minimal bid value of NFTs on Bend DAO to be pegged to 95% of the ground value on fashionable digital collectibles buying and selling platform OpenSea can be eliminated. Interest charges on loans are to be reset from the present 100% to twenty%. Finally, the BendDAO treasury can be empowered to cowl the unhealthy money owed and use income.
The collapsing ground costs of NFTs within the bear market, even amongst respected collections, have positioned many NFTs at risk of liquidation as rates of interest are pushed to irregular ranges. As rates of interest on “debt-secured” NFTs have skyrocketed to almost 100%, some customers could also be discovering it extra economical to easily let go of their digital collectibles (that are additionally lowering in worth) as an alternative of paying again the debt, leading to unhealthy loans. Thirdly, NFT markets will not be as liquid as cash or token markets, which means there really is probably not bids throughout an NFT’s liquidation course of, additional including to the dying spiral.
Bend DAO was considered a blue-chip NFT borrowing and lending platform earlier than credit points started. The vote for the present proposal will final for twenty-four hours and has handed the required quorum of 47 million veBend with 99.23% in favor.
1/ A on how @BendDAO at present works, why the FUD is flawed, and the true issues with the present protocol.
Full disclosure: I pulled all my $eth yesterday and haven’t any present publicity. This is to assist others perceive their place or these occupied with lending.
— TradFiWhale.eth (@TradFiWhale) August 21, 2022
