Here Is Why NFT Market Will Go Down to Zero Quicker Than You Think

hi frens 🤠

I know, we are coming in hot. A clickbait title, they say. However, as you will see later if you keep reading this article, there are reasons for it and it is not clickbait as you think it is. Today’s focus will be on crypto lending platforms, more specifically BendDAO.

First of all, what is BendDAO?

As per their official definition on their site, BendDAO is a platform where you can use your NFTs as a collateral to borrow ETH as well as deposit your own ETH and earn yields for doing that. Our focus will be on the borrowing side of it.

Let’s make it simple.

Like in the traditional finance, to get a loan, you have to deposit something with the institution (i.e. collateral) in order to be able to get that loan. Usually, the collateral amount is always higher than the amount of the loan.

Let’s say you want to get a $20k loan. Depending from the institution, usually it might be between 120–150% of the loan amount. Meaning that if you want to get the $20k loan, you have to provide the bank something that is worth $24-$30k and transfer the ownership to them.

Now, let’s say you face financial difficulty of some sort, bank has the right to go in the market and liquidate (sell) that asset to get the amount of the loan they gave you initially, hence they always ask to provide something that is worth more than the money they…