Protocol for lending BendDAO’s contract has run out of Wrapped Ether (wETH). At the time of writing, the contract has only 15 wETH to pay lenders and an estimated 15,000 Ether (ETH) to pay lenders.
In a Twitter thread, researcher NFTStatistics.eth dissected the issue, highlighting that nonfungible token (NFT) borrowers on the platform should now pay 100% interest on the ETH they borrowed. Furthermore, the debt positioned against NFTs is increasing.
While you were asleep the BendDAO bank run finally happened
15 wETH ($25,081) left in the wallet that had 18,000 ETH ($29,160,000) in it just 48 hours ago
Still 14,500 wETH owed to lenders….
Absolute shitshow pic.twitter.com/RKkdqVAVIf
— Cirrus (@CirrusNFT) August 21, 2022
The researcher also pointed out that many of the defaulted NFTs that were used as collateral currently have no bids. Due to falling NFT floor prices, rising debt, and high interest rates, more NFTs that are about 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 of the vote’s conclusion, the update will go into effect.
A Twitter user used the crisis as an opportunity to mock the platform, noting that even BendDAO’s co-founder was about to be liquidated by their own lending 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 launched GameStop NFT marketplace has suffered as floor prices of BAYC and Mutant Ape Yacht Club collections have plummeted, with its daily fee revenue falling below $4,000 as a result.