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NFT: Bored Ape Yacht Club Mass Liquidation Coming?

 


It has been revealed that several Bored Apes and Mutant Apes NFT owners were borrowing NFTs on the BendDAO against Ethereum. Therefore, there are increasing fears of a liquidation cascade.


News of the potential liquidation cascade broke when a Twitter user shared the screenshot of a Bored Ape NFT being auctioned .


The floor price (“minimum price”) of the Bored Ape BAYC #533 is currently 72 ETH. The NFT was previously used as collateral for a 66.95 ETH crypto loan and is therefore being auctioned off.



At the time the article was published, there were no bids for the NFT. However, it looks like several Bored Ape NFT holders also took out a loan of around 60 ETH for digital monkeys.


BendDAO is one of the most popular peer-to-peer NFTFi protocols. With this protocol, users can borrow ETH against the floor price of the NFT. Typically, NFT holders receive up to 40% of the reserve price as a loan.


The total value of NFTs pledged as collateral with BendDAO is over $59 million. A total of 272 BAYC NFTs, ie 2.8% of the collection , are deposited as collateral on the platform. Also, 1.6% of the Mutant Apes collection resides on the platform.



The BendDAO uses the so-called “ Health Factor” (HF) to assess the liquidation risk. 45% of BAYCs are in the “danger zone”, meaning HR is less than 1.2. If the HF is 1, the affected NFTs are likely to be foreclosed on.


Liquidation could further depress NFT floor price

If there are further auctions of the BAYC NFTs, the reserve prices of the other NFTs may fall further. A liquidation cascade on the NFT market could be the consequence.


Many members of the crypto community even compared the scenario to the collapse of Celsius or the crash of Voyager Capital. Until now, there have only been a few Mutant Ape foreclosures. However, should NFT owners fail to repay the loans, more foreclosures could follow.


BendDAO co-founder close to liquidation

Ironically, one of the co-founders of the BendDAO is himself a Bored Ape NFT owner and is about to be foreclosed on.



Another ape owner, nicknamed Franklin, also caused a stir. Franklin borrowed 10,000 ETH for 60 Bored Apes. Although many were concerned that the liquidation of these NFTs could have a knock-on effect on the market , Franklin clarified that he has already repaid the loan .



Nevertheless, fears of a possible wave of liquidations persist. On Twitter, many users compare the scenario with the crash of the crypto platforms Celsius and Voyager.

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All information contained on our website has been researched to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action that the reader takes based on the information found on our website is entirely at their own risk.

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