Many nonfungible tokens, or NFTs, that were used in collateral on the platform have defaulted and not been offered for bids.
Lending protocol BendDAO ran out of Wrapped Ether. The contract has only 15 WETH left to pay lenders and 15,000 Ether ( ETH) to be paid to lenders at the time of writing.
The issue was discussed by researcher NFTStatistics.eth in a Twitter thread. He highlighted that NFT borrowers on the platform should now pay 100 percent interest on the ETH borrowed. The NFT debt is on the rise.
The researcher also noted that many NFTs that were used as collateral but have defaulted have no bids. This is because there are many NFTs that have been used as collateral and defaulted currently have no bids.
BendDAO cofounder says that their team is currently working to modify parameters in the NFT lending platform. After the vote is approved, the update will be effective within 24 hours.
Twitter user took advantage of the crisis to make fun of the platform , pointing out the fact that BendDAO’s co-founder is also in danger of being liquidated by their lending platform.
Analysts speculated last week that an incoming series of NFT liquidations could be underway to recover BendDAO loans. It was estimated that the liquidations would amount to $55 million. Double Studio founder DoubleQ said that the situation could cause a “death spiral” for the entire NFT market as well as the Bored Ape Yacht Club ecosystem.