Liquidation fears dominate the non-fungible token market after it was revealed that multiple holders of Bored Apes and Mutant Apes had borrowed against NFTs on BendDAO.
The news broke on Twitter after a user shared a screenshot of an auctioned Bored Ape NFT.
BAYC #533 used as collateral against a loan of 66.95 ETH was put up for auction as Bored Ape’s lowest price is currently 72 ETH.
No one has bid on the NFT yet, but it looks like other Bored Apes holders have also borrowed around 60 ETH on the protocol.
BendDAO is one of the popular peer-to-peer NFTFi protocols that allows people to rent ETH against NFT floor prices. Normally, an NFT holder can borrow up to 40% of her lowest price.
Overall, the NFTs used as collateral in BendDAO are worth over $59 million. There are a total of 272 BAYCs backed by the platform, representing 2.8% of the collection, as well as the Mutant Apes collection of 1.6%.
Liquidation risk is significant as some of these NFTs have low health factors. 45 pieces of BAYC are in the danger zone, which has a health factor below 1.2, indicating that they are about to be auctioned.
Liquidation could further push BAYC floor prices lower
There are concerns that if these BAYCs are put up for auction, the floor price could drop further, triggering a massive liquidation in the NFT market.
However, concerns remain for many who compare the possibility of an NFT liquidation similar to the Celsius or Voyager crashes.
So far, several Mutant Ape auctions have already taken place, with more likely to follow if debtors are liquidated without paying back their loans.
BendDAO co-founder also close to liquidation
Ironically, one of the owners of Bored Apes is dangerously close to being auctioned is the co-founder of BendDAO itself.
Another debtor that seems to be getting more attention is Franklin. borrowed 10,000 ETH for 60 boring monkeys. Many were concerned that their liquidation could have a seismic effect on the market, but he revealed that he had paid off the loan.
But concerns remain for many who compare the possibility of an NFT liquidation similar to the Celsius or Voyager crashes.
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