Between August 19 and 21, NFT platform BendDAO was hit by a bank run. More than 15,000 Ethereum (ETH), were withdrawn from the contract in less than 48 hours.
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The BendDAO bank run happened while you were sleeping
15 wETH ($25081) was left in the wallet with 18,000 ETH ($29.160,000) just 48 hours earlier
14.500 wETH still owing to …. lenders
Absolute shitshow pic.twitter.com/RKkdqVAVIf
Cirrus (@CirrusNFT), August 21, 2022
According to Etherscan data, the contract currently holds 151.52 wrapped Ethereum, or approximately $235,000.
NFT liquidation fears
BendDAO was in the forefront of news following reports that bluechip NFT owners had taken out loans against their NFTs. This spread liquidation fears on Twitter.
Benddao co-founder
Benddao is about to liquidate
pic.twitter.com/DvrNLI7lcc
— Erick
(@EB7) August 19, 2022
Double Q’s August 19 Twitter thread claims that the liquidation could wipe out as much as $55 Million from the space.
1/ How @BendDAO/BAYC loan liquidation could wipe out the entire NFT Market
30300 ETH ($55m), worth of NFTs on-line
Protect yourself with this essential thread
— doubleQ (@xDoubleQ), August 19, 2022
NFTStatistics posted a Twitter thread stating that users who loaned ETH to others could not withdraw their funds due to insufficient money in BendDAO’s contract. He stated that the platform lent around 15,000 ETH.
Ok. A long thread about the BendDAO situation
1) They have run out of ETH. The contract has 12.5 WETH. 2) What does this signify? People who borrowed money via BendDAO to purchase NFTs using leverage cannot take their money out. Around 15,000 ETH were lent.
(1/9)
— NFTStatistics.eth August 21, 2022 (@punk9059).
If borrowers are unable to repay their debts in full, more NFTs may be put on the auction block. This is especially true if the floor price keeps falling.
There are no bids for NFTs that have been enslaved by debt
Most NFTs that defaulted on loans have yet to receive an offer. Only 4 of 17 Mutant Apes up for auction received an offer. Other collections such as Bored Ape and Doodles have received nine bids for the auction’s 28 NFTs.
5) What does this mean for my NFTs
It depends. It all depends.
13/17 MAYC 5/9 BAYC 6/8 CloneX
Total # of NFTs to be auctioned with no bid/total NFTs to auction (for example, 4 MAYC have bidding)
(3/9)
— NFTStatistics.eth August 21, 2022 (@punk9059).
The BendDAO requirements are the main reason for the lack of bids. The first is that the offer must be higher than the OpenSea floor and debt prices. Second, bidding must be completed within 48 hours.
These two requirements discourage many people, particularly since the debt is often higher than the floor price.
Bad debt
A Twitter user pointed out that BendDAO could end up with bad debt if NFTs’ floor prices continue to fall.
7/ We can see that only long-term hodl lichidators will bid. If there is no bid, and the floor prices keep falling lower, @BendDAO will have bad debt. Benddao will end-up Hodling NFT. There are no cascading liquidations. There are some good news and also bad news.
— TradFiWhale.eth August 21, 2022 (@TradFiWhale).
It could lead to a vicious circle in which ETH lenders would compete to withdraw and leave the protocol with NFTs valued below the debt and lenders unable withdraw.
The user suggested that liquidations be done within one hour, instead of the 48-hour time frame.
Slides of the floor price for CryptoPunk, Bored Ape
NFTpricefloor data showed that Bored Ape’s floor price dropped by more than 13% in the past seven days.
The data shows that the NFTs of the collection traded at as low as 65.67ETH on August 20, according to the data.
Other top collections, such as CryptoPunks or Mutant Ape, also saw a drop of 5% and 7.7% respectively.
According to CoinGecko, CryptoPunks’ NFT floor prices briefly flipped the price of Bored Ape on Aug 21.
BREAKING: #NFT Bored Apes briefly flips Cryptopunks floor prices
— CoinGecko (@coingecko), August 21, 2022
Fears of a worsening debt CryptoSlate have led to BendDAO running low on funds.
