Many Bored Ape NFTs Are In Danger of Getting Liquidated As Borrowed Money Comes Back To Bite
The NFT lending platform BendDAO has collateralized almost 3% of the entire Bored Ape collection, and many NFTs have recently entered the danger zone of liquidation.
Dozens of Bored Ape Yacht Club non-fungible tokens (NFT) purchased with borrowed money sit perilously close to being forcibly sold. There’s also the worry that it could trigger even more liquidation.
Loan Hits Back On Customer
The problem is brewing at BendDAO, a peer-to-peer lending service that lets users borrow ether (ETH) against their NFTs.
Customers can typically take out a loan equal to 30% to 40% of the NFT collection’s floor price, or the minimum price to purchase one on the open market, with the NFT pledged as collateral.
BendDAO is popular among NFT collectors, so the scope of any fire sale could be massive. The 272 Bored Apes tied to BendDAO represent 2.72% of the entire collection. A mass liquidation event could also have implications for other NFT lending services, which have risen to prominence in the past year as the NFT industry has exploded in popularity.
Bored Apes is one of the most prominent NFT collections, if not the single most important one. So, cascading liquidations in that space could have broad consequences beyond just the Bored Apes.
The short-term fluctuations in NFT floor price are normal, BendDAO said in a statement. Consensus on blue chip NFTs wasn’t built in a day, and it will not collapse in a short period.
Franklin has 60 apes
One prolific NFT collector known as Franklin quickly became a focus of concern as the largest borrower on the platform. Franklin owns 60 Bored Apes and has taken out more than 10,000 ETH (around $17.5 million) in loans from BendDAO, although Franklin tweeted that he has since paid off the loans.
