BAYC Floor Price Plummets, Fears Of Liquidation Arise

Ayush Pande
21.08.2022
“As a result of the floor dropping to 72, the first BAYC liquidation auction on BendDAO has begun.” notes Twitter user Cirrus.

With a sharp decline in BAYC collection's prices, many Bored Ape NFTs are under the threat of liquidation on BendDAO.

BendDAO is an NFT lending platform that allows its users to leverage their NFTs as collateral in exchange for Ethereum loans. BendDAO enables users to leverage 30-40% of the NFT’s floor price as collateral; however, as BAYC NFTs dip past 50% of their all-time high and approach their floor prices,  the collection is at risk of getting liquidated.

BendDAO utilizes the "health factor" as the metric to assess the liquidation level of an NFT-backed loan; when this value drops to 1.2, the NFTs are classified under the "danger zone"; when the health factor hits 1, the NFT is locked in a 48-hour time window, and the owner can sell their NFT to repay the loan and clear the debt.

As of writing this article, one BAYC NFT, in addition to a few MAYC NFTs, has hit a health factor of 1.

Concerns Over BAYC Liquidations    

The platform currently has $59M worth of NFTs as collateral, with the BAYC collection amounting to $1.65M of the collateral. Moreover, 72 out of the 272 BAYC NFTs on BendDAO have fallen under the “danger zone.” Moreover, BendDAO's co-founder's own Bored Ape is under the threat of liquidation.

Since BAYC is one of the most popular NFT collections, many NFT enthusiasts fear that the liquidation of BAYC backed-loans could have a cascading effect on the rest of the NFT ecosystem.

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