A Looming Bored Ape Crisis?
By Lesia Dubenko 2102 23 Aug 2022
Dozens of Bored Ape Yacht Club non-fungible tokens (NFT) that have been bought with borrowed money on BendDAO, a peer-to-peer lending service that lets users borrow ether (ETH) against their NFTs, may be sold soon, causing a cascade of liquidations.
Because of the market fluctuations, the NFT floor prices, against which the lenders take their loans, have tumbled from 125 ETH, when most of the NFTs were bought, to just over 70 ETH. As a result, 45 of the 272 Bored Apes worth $5.3 million with BendDAO loans tied to them are at risk of being liquidated.
The 272 Bored Apes tied to BendDAO represent 2.72% of the entire collection, with 19 mutant apes up for sale in the BendDAO auctions.
Although in the past month ETH’s price went up from 1 thousand to 2 thousand, the problem is that lending services like BendDAO are denominated in their originally lent token. This makes it possible for some Bored Apes to be liquidated at higher prices than when they were purchased.
Commenting on the development BendDAO said that “the short-term fluctuations in NFT floor price are normal”, adding that “consensus on blue chip NFTs wasn’t built in a day, and it will not be collapsed in a short period of time.”
Franklin, a well-known NFT collector who lost $150,000 in ETH due to an ill-conceived joke, is among the largest borrowers 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.
Previously, Gagarin News covered the difference between Yeti Yacht Club and Bored Ape Yacht Club.