Liquidation Fears Mount as BAYC NFTs Floor Price Drops

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Fears of liquidation have gripped the non-fungible token market after it emerged that several Bored Apes and Mutant Apes holders borrowed against their NFTs on BendDAO.

The news broke out on Twitter after a user shared a screenshot of a Bored Ape NFT made available for auction.

With the floor price of Bored Ape now at 72 ETH, BAYC #533, which was used as collateral against a 66.95 ETH loan, has now been listed for auction.


As a result of the floor dropping to 72, the first BAYC liquidation auction on BendDAO has begun

Starting price of 68.4e…

Any takers or is this going to be the first bad-debt domino that falls for the platform?

— Cirrus (@CirrusNFT) August 18, 2022

Although no one has made a bid for the NFT yet, it appears that several other Bored Apes holders borrowed around 60 ETH on the protocol too. 

BendDAO is one of the popular peer-to-peer NFTFi protocols that allow people to borrow ETH against the floor price of their NFTs. Usually, NFT holders can borrow up to 40% of the floor price. 

Overall, NFTs used as collateral on BendDAO are worth over $59 million. A total of 272 BAYCs which is 2.8% of the collection are collateral on the platform, while 1.6% Mutant Apes collection are also there. 

There are currently 32,267 ETH ($59,048,610) worth of NFTs being used as collateral for loans on BendDAO alone

For the first time ever, a lot of these are at serious peril of liquidation

A thread on the single biggest risk to the NFT market that nobody is talking about

— Cirrus (@CirrusNFT) August 17, 2022

With several of these NFTs having low health factors, the risk of liquidation is significant. Forty-five of the BAYCs are in the danger zone, which is a health factor below 1.2 that suggests they are close to being auctioned off.

Liquidation might further tank BAYC floor price

The fear is that if these BAYCs are auctioned off, it might further drive the floor price lower, hence triggering a massive liquidation in the NFT market.

However, the concerns still remain with many comparing the potential of an NFT liquidation similar to Celsius or Voyager’s crash.

So far, there have been a few Mutant Apes auctions already, but more could follow if the debtors don’t repay their loan and get liquidated.

BendDAO Cofounder also close to liquidation

Ironically, one of the Bored Apes holders dangerously close to getting auctioned is the co-founder of BendDAO itself.

Another debtor that seems to catch attention is Franklin, who borrowed 10,000 ETH against 60 Bored Apes. While many were concerned that their liquidation could have a seismic impact on the market, he clarified that he has repaid his loan.

I currently owe 0 ETH to BendDAO and have 60 apes in my wallet. I have borrowed 10245.37 ETH from them, and have paid it off plus 9.13 ETH total interest. If I was in debt 10k ETH, I would not payoff and would be chilling on an island right now. Starting a short spaces now.

— Franklin has 60 apes (@franklinisbored) August 18, 2022

However, the concerns remain with many comparing the potential of an NFT liquidation similar to Celsius or Voyager’s crash.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.


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