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NFT lending protocol Bend DAO proposes emergency changes amid credit crisis

Aug 23, 2022
NFT lending protocol Bend DAO proposes emergency changes amid credit crisis

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On Monday, builders of decentralized nonfungible tokens (NFTs) borrowing and lending protocol Bend DAO proposed new emergency measures in an try to stabilize the ecosystem. The identical day, it was revealed that the challenge had simply as little as 15 wrapped Ether (wETH) value $23,715 to pay again lenders. Roughly 15,000 ETH was lent utilizing the mechanism. To save lots of the protocol from a credit score disaster, the Bend Dao dev crew instructed that the liquidation threshold for collateral can be constrained to 70% of the mortgage worth, down from 85%. 

Subsequent, the public sale interval for NFTs on its platform can be diminished from 48 hours to 4 hours. Then, the requirement for minimal bid worth of NFTs on Bend DAO to be pegged to 95% of the ground worth on in style digital collectibles buying and selling platform OpenSea can be eliminated. Rates of interest on loans are to be reset from 100% presently to twenty%. Lastly, the BendDAO treasury can be empowered to cowl the unhealthy money owed and use income.

The collapsing flooring costs of NFTs within the bear market, even amongst respected collections, has positioned many NFTs at risk of liquidation, as rates of interest are pushed to irregular ranges. As rates of interest on “debt-secured” NFTs have skyrocketed to just about 100%, some customers could also be discovering i it extra economical to easily let go of their digital collectibles (that are additionally lowering in worth) as a substitute of paying again the debt, leading to unhealthy loans. Thirdly, NFT markets are usually not as liquid as cash or token markets, that means there could not really be bids throughout an NFT’s liquidation course of, additional including to a dying spiral.

Bend DAO was thought to be a blue-chip NFT borrowing and lending platform earlier than credit score points started. The vote for the present proposal will final for twenty-four hours and has handed the required quorum of 47 million veBend with 99.23% in favor.