On Monday, developers of decentralized non-fungible tokens (NFTs) borrowing and lending protocol Bend DAO suggested new emergency measures in a bid to stabilize the ecosystem.
The same day, it was revealed that the project had just 15 wrapped Ether (wETH) worth $23,715 to repay lenders. Approximately 15,000 ETH was loaned using the mechanism to protect the protocol against a credit crisis, the Bend Dao development team suggested lowering the collateral liquidation level from 85% to 70%.
Following that, the NFT auction duration on its platform will be lowered from 48 to four hours. Then, the requirement for the minimum bid price of NFTs on Bend DAO to be placed at 95% of the floor price on popular digital collectibles trading platform OpenSea would then be lifted. Also, the loan interest rates are planned to be reduced from 100% to 20%. Lastly, the BendDAO treasury would be given the authority to pay bad debts and utilize revenue.
The plummeting floor prices of NFTs in the bear market, even among respected collections, have put many NFTs in jeopardy of liquidation when interest rates reach abnormally high levels.
As interest rates on "debt-secured" NFTs have almost tripled to over 100%, some users may find it more cost-effective to just sell their digital collectibles (which are also plummeting in value) rather than repay the debt, resulting in bad loans. Furthermore, because NFT markets are not as liquid as coin or token markets, there may be no bids throughout an NFT's liquidation process, leading to the death spiral.
Bend DAO was considered as a blue-chip NFT borrowing and lending platform before the credit troubles began. The current proposal will be voted on for 24 hours and has received the requisite quorum of 47 million veBend with 99.23% in favor.
As previously reported by CoinGabbar, several NFTs platforms witnessed a dramatic fall in trading volume as a result of the bear market, however, it appears that platforms are implementing several improvements to their platforms to recover from such losses.

Top NFT News: NFT Lending Protocol Bend DAO Proposes Emergency Changes Amid Credit Crisis

Coingabbar

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