Why BendDAO Poses a Threat to NFT Collectors
Growing pains in the world of NFT Finance
This research memo is for educational purposes only and not an inducement to invest in any asset. Subscribe to Blockcrunch VIP to receive in-depth project analysis, valuation models and exclusive AMAs.
On 18th August, unbeknownst to many, the biggest risk the NFT market has ever faced emerged: the possible liquidation of 32,200 ETH ($58 million) worth of NFTs that were collateralized on lending platform BendDAO.
The falling NFT floor prices due to the lack of demand and the sudden increase in NFT supply from liquidations seemed to herald a potential death spiral for supposed NFT “blue-chips”.
Will NFT lending markets widespread systemic risk similar to Luna’s implosion? What happened with BendDAO, and what does it teach us about the nascent NFT lending space?
In this week’s Blockcrunch VIP, our research team breaks down the BendDAO liquidity scare in simple terms, and propose alternative solutions in the market today. As a disclaimer, Jason is a small angel investor in NFT.fi, a company building in the same vertical as BendDAO.
Contents:
How does BendDAO work?
What is BendDAO
Liquidations on BendDAO
Panic at the BendDAO
Latest update
Peer-to-Pool vs. Peer-to-Peer Models
Comparison of Upcoming Novel Alternatives