BendDAO, a lending protocol, has exhausted the Wrapped Ether (wETH) in its contract with only 15 left and an estimated 15,000 Ether (ETH) at the moment that will be used to pay lenders.
In a Twitter discussion, researcher NFTStatistics.eth broke down the problem and pointed out that NFT platform borrowers now had to pay 100% interest on the ETH they borrowed. Additionally, there is an increase in the debt secured by NFTs.
The study also pointed out that many of the defaulting NFTs that were utilized as collateral today had no bids. Due to dropping NFT floor prices, mounting debt, and high-interest rates, more NFTs that are set to default and go up for auction are now listed on the platform’s alert list.
The co-founder of BendDAO claims that their team is developing a proposal to alter the NFT lending platform’s parameters. Within 24 hours after the vote’s conclusion, the modification will go into effect.
A Twitter user used the problem as an opportunity to mock the company, noting that even BendDAO’s co-founder was about to be liquidated by their own loan platform.
Analysts predicted last week that a series of $55 million NFT liquidations may be forthcoming to recoup loans on BendDAO. The situation might result in a “death spiral” for the entire NFT market and the Bored Ape Yacht Club (BAYC) ecosystem, according to DoubleQ, the founder of Double Studio.
The NFT industry as a whole isn’t doing any better, though. The recently created GameStop NFT marketplace has suffered as floor prices of BAYC and Mutant Ape Yacht Club (MAYC) collections have plummeted, with its daily fee revenue falling below $4,000 at the time.
