If the borrowers fail to repay the loans secured by the NFT tokens they received from the Bandao platform, $55 million in capital will be liquidated in the form of peerless tokens.
According to Mihan Blockchain and quoted by CryptoSlit, the BendDAO NFT platform underwent a Bank Run on August 19-21 (28-30 August), during which 15,000 Ether were withdrawn from the contracts of this platform within 48 hours. .
Atlasscan information It shows that there are currently only 151.52 EPR equivalent to $235,000 in Banddao contracts. The way the Dow clause works is that users who own an NFT token and need to borrow some Ethereum can put their NFT as collateral and receive Ether equivalent to less than 30% to 40% of the price floor of that token pool. But if, according to the calculations of this platform, the health value of your collateral falls below the number 1, that collateral will be liquidated. Currently, the health status of many tokens is close to the number 1, which means that they are subject to liquidation. Their liquefaction can cause continued liquefaction.
Fear of liquidating NFT tokens
Fears of liquidation of NFT tokens spread across the crypto community after news broke that NFT token holders had received loans from the Banddao platform in exchange for their tokens.
According to a series of tweets by Double Q on August 19, the liquidation of these tokens could remove $55 million from the market.
Another series of tweets from NFTStatistics stated that users who lent their Ether to other users were unable to withdraw their funds because there was not enough capital in the Banddao platform contract. According to NFTStatistics, the platform has lent out almost 15,000 Ether.
More NFT tokens will be auctioned if borrowers default on their debt and loan payments, especially as the price floor for these tokens continues to decline.
There are no offers for NFT tokens linked to loans
In the meantime, there are no offers to buy for most NFT tokens that are pledged to repay loans. For example, only 4 out of 17 Mutant Apes tokens have been bid on in the auction. Other NFT token collections such as Bored Apes, Doodles, and CloneX have had a total of 9 bids for 28 NFT tokens.
The lack of a purchase offer is mainly due to the requirements and rules of the Bandao platform. The first rule is that the purchase offer must be higher than the debt value and the open price floor. The second rule is that bidders must lock their Ether on BandDao for 48 hours.
These two laws make many people stay away and discouraged, especially because sometimes the said debt is more than the floor price of OpenC.
The Bandao platform is exposed to debt
In the meantime, one Twitter user has admitted that if the price floor of these NFT tokens continues to decrease, the Bandao platform is at risk of facing bad debt does not have added value) is placed.
In these cases, a cycle may be created in which Ether lenders compete to withdraw their capital, leaving NFT tokens in said protocol worth less than debt, and lenders unable to withdraw their capital.
Lowering the price floor of Castle Monkeys and Cryptopunks
Information NFTpricefloor It shows that the price floor of Monkey Castle’s NFT tokens has fallen by more than 13% in the past week.
According to this information, the price of NFT tokens of this collection has decreased to 65 Ether on August 20.
Other NFT tokens such as Cryptopunk and Mutant Monkeys have also experienced price drops of 5% and 7%, respectively. Also, after 5 months, for the first time, the price floor of Crypto Panx collection (66.45 Ether) is higher than the price floor of Castle Monkeys collection.