BendDAO Hedges Towards Liquidation Amidst Sky High Interest on Loans
BendDAO is running out of ETH, There is just 12.5 WETH in the contract. What does this mean? People who lent money to others via BendDAO to buy NFTs on leverage can't pull their money out.
About 15,000 ETH was lent. It also means NFT borrowers must pay 100% interest on their borrowed ETH.
The "Debt" against these NFTs is rising quickly now, What does that mean for my NFTs? It depends. Right now, the majority of NFTs that have defaulted have no bids
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13/17 MAYC
5/9 BAYC
8/11 CloneX
6/8 Doodles
Total number of NFTs for auction with no bid/total number of NFTs for auction (so, for example, 4 MAYC have bids)
Why are there no bids? Two reasons:
(a) BendDAO requires bids above the "debt" the borrower owes AND above OpenSea floor * 0.95
(b) To open bid, you have to lock up ETH for 48 hrs
Debt is sometimes higher than floor and people don't want the 48 hr risk on floor NFTs.
There are a lot more NFTs about to default and come to auction, either due to debt rising with these sky-high interest rates or OpenSea floor falling. See link; https://lnkd.in/dZCGbsZK
Currently, those NFTs are hitting BendDAO auctions and not hitting exchanges. Why? Because no one is bidding on them. The DAO is getting stuffed with holding them.
Eventually the DAO needs ETH from those NFTs to pay lenders who can't withdraw ETH. So we will have to wait and see what the DAO decides, Do they hold these NFTs and hope floors recover?
Or do they change their terms (bidders don't need to cover full debt & can bid at a bigger discount to OS floor) to make it easier for DAO to sell NFTs/collect ETH?
Do they find a market-maker who buys them at a sharp discount and sells them over time?
As long as they sit on the NFTs with no bids, the market doesn't feel it directly. We'll wait and see.
Hopefully, the market can absorb whatever comes and work through it.