One of the most popular lending platforms for holders of NFTs such as Bored Apes to borrow against their collections is revising its terms after a drop in prices threatened to trigger the liquidation of much of the collateral backing many of the loans. A majority of the community of investors known as a decentralized autonomous organization that runs BendDAO voted to support changes in the protocol’s code to make borrowers’ NFT collateral more liquid, while also enticing lenders to stay put with higher interest rate. Users had started rushing to withdraw deposits from the platform amid concern about a potential liquidity crunch on Friday. The total value of crypto assets locked in BendDAO’s protocol dropped by about 50% to around $41 million during the weekend, according to data from DeFi Llama.Lending against pricey NFTs, which are unique tokens on blockchains, has been one of the latest trends in crypto. The amount of Ether that NFT owners can borrow on the platform is anywhere between 30% and 40% of the NFTs’ floor price on BendDAO, which is the lowest set amount a bidder is eligible to buy an NFT from a collection. NFTs from the Bored Ape Yacht Club collection make up about 68% of the assets that serve as collateral on the BendDAO platform, while another 16% is from Mutant Ape Yacht Club tokens. The DeFi peer-to-peer platform enables NFT holders to borrow cryptocurrencies such as Ether without forcing them to cede control of the assets. Meanwhile, Ether holders can lend out their tokens through the protocol and earn interest. Unlike centralized crypto lenders such as Celsius and BlockFi, the DAO allows participants to collectively vote for changes in the protocol’s code. The recent rise in Ether prices amid the general crypto bear market combined in part to trigger the large-scale liquidations on BendDAO last week. As the Ether denominated loans increased in value in dollar terms, the value of NFT collateral continued to depreciate. That triggered the protocol to begin a process to liquidate the collateral through auctions.
Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Great Crypto post. We've reshared it.
🙏🔁👍
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit