A series of Bored Ape Yacht Club (BAYC) loan liquidations on NFT liquidity pool BendDAO could wipe out the entire NFT market, warned pseudonymous crypto analyst “doubleQ.”
What Happened: BAYC holders that deposited their NFTs on BendDAO in exchange for short term Ethereum ETH/USD are at risk of being liquidated and losing their assets, as per data from BendDAO.
BAYC loan deathspiral starting pic.twitter.com/k4DZ0z4TSn
— moon (@MoonOverlord) August 19, 2022
See Also: WHAT IS BORED APE YACHT CLUB?
BendDAO is a peer-to-peer decentralized lending platform for NFTs. Users could deposit their Bored Ape NFTs on the platform as collateral and get a loan worth up to 40% of the NFT’s value.
As the price floor for the BAYC collection has dropped to 72 ETH, as per data from CryptoSlam, the health factor of those who deposited their Bored Apes have fallen to health levels under 1.2, suggesting a mass liquidation event is likely to unfold.
5/ BendDAO currently holds 272 BAYCs (2.72% supply) and 309 MAYCs (1.59% supply)
Other platforms also have a fairly large amount of near liquidation loans
Liquidation will cause a death spiral for the BAYC ecosystem and NFT market as a whole. pic.twitter.com/m4s1ciZQ99
— doubleQ (@xDoubleQ) August 19, 2022
“Opensea volume is at the lowest point ever in the last 12 months. There’s simply not enough volume to save these liquidations,” doubleQ said on Twitter. “It’s inevitable.”
If you hold a BAYC you consider getting out before the defend falls. Which is >65 eth.
Once 64eth floor price is hit, death spiral will start. Dm or msg if you need a private talk. #baycdeathspiral #bayc
— CRYPTO_POON | Quant Trader | MM | Investor | YT (@Crypto_POON) August 18, 2022
Although BendDAO accounts for just two to three percent of BAYC supply, the implications of the liquidations could still add a significant amount of pressure to the underlying collection’s floor price.
And that will cause the floor price to drop causing more apes used as collateral to come on the auction block.
— Normie (@NormieNFT) August 19, 2022
See Also: Ethereum Co-Founder Vitalik Buterin: Millions Of People Have Crypto Wallets To Trade Monkey Pictures
Price Action: At press time, ApeCoin APE/USD, the native token of the BAYC ecosystem, was trading at $5.61, down 8.6% over 24 hours.
Bitcoin BTC/USD, Ethereum ETH/USD and Dogecoin DOGE/USD were trading at $23,100, $1,184 and $0.075, respectively.