BAYC Liquidations On The Horizon??
Uh oh! Looks like the largest NFT liquidation even is looming. Quite a few owners of NFTs such as Bored Ape Yacht Club and CryptoPunks are shaking in their boots, as they may have no choice but to see their prized possessions taken away from them. Those owners who have used their NFTs as collateral for borrowing funds may not have enough to repay after the NFT market’s continuous downtrend. BendDAO, a lending service, has started to auction off $55m worth of NFTs that have a falling health factor to avoid holding bad debt and to recover its’ loans. From that point, NFTs holder have 48 hours to pay back their loan, or they will be liquidated. Although sad new for their current holders, the liquidations will offer a discount for those looking to purchase them.
NFT lending is something I’ve looked into for my current company and the problem I saw is that when the market is hot, NFT lending can be extremely lucrative. However, the downturn we are seeing tends to make the NFT world experience the downturn far worse than what we see with cryptocurrency, since NFTs tend to be over-leveraged by design. For the sake of those current BAYC/CryptoPunk holders, I hope they are able to save their prized possessions before the crypto-repo man comes for them!