Bored Ape NFT is the danger of being liquidated as an NFT Lending platform collateralizes 3% of the collection
BendDAO and its introduction
Credits: Ccryptoo
BendDAO is basically a platform that helps users to borrow Ethereum or deposit their Ethereum and helps them acquire benefits on them. The platform is a peer-to-peer lending service, which enables the investors borrow, Ethereum against NFTs. BendDAO is also a Bored Ape NFT enthusiast, as it has around 272 collections of the NFT in the platform.
According to reports, there are certain problems that are brewing in the lending platform. Essentially, the investors are allowed, to take a loan at 30 or 40% of the floor prices of the NFT, but since there has been a of fluctuations in the previous months, the floor prices have tumbled a little too much for the platform to handle. As a result, the platform went on to collateralize at least 3% of the Bored Ape NFT collections
Bored Ape NFT collections enter the Danger Zone
According to the reports coming from the platform, it is believed that, out of the 272 Bored Ape NFTs the lending platform has, around 45 have already entered the “Danger Zone.” Danger Zone means, the NFT which are used as collateral are closer to getting liquidated. If the reports are to be believed, around 5 million dollars of Bored Ape NFTs are tipped to be liquidated.
Liquidation fear among the NFT industry
Since, Bored Ape NFT is one of the most popular and well capitalized NFT, the liquidation of such a huge number of collections carries a huge risk of imploding the NFT industry itself, as the liquidation fears linger nearby.
Reportedly, most of the investors of the NFT brought the asset a few months ago at around 125 ETH. As the market imploded, the current value of their NFTs are at around 70ETH and as a result many of them want to liquidate their NFTs now fearing more reduction in the values.
Writer’s Views
According to me, NFTs should not be brought on credit, especially, the credit from another form of digital asset. Being a volatile market, it is very difficult to keep track of the investment and very difficult to predict the future, it is safe to invest in NFT using fiat currency and that too not in credit.
What do you think about the method of buying NFTs for credit? Share your thoughts in the comment section below. Also share this article with your family and friends if you liked it.
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