Users drain BendDAO lending protocol to 12.5 WETH

The BendDAO NFT-collateralised lending protocol’s smart contract has 12.5 WETH left to pay creditors, roughly 15,000 ETH. This was reported by a researcher under the pseudonym NFTStatistics.eth.

User Cirrus noted that the contract was drained in 48 hours.

According to NFTStatistics.eth, the situation means that borrowers on the platform must pay 100% interest on the funds they borrowed. In addition, the debt against the collateralised tokens is growing.

In this context, the list of NFTs put up by the protocol for auction is expanding as default looms. This is aided by falling underlying prices on trading platforms.

At the same time, most auctions have no bids. The expert says buyers are deterred by the prices asked by the platform and the need to lock ETH for 48 hours to open a position.

5) What does that mean for my NFTs?

It depends. Right now, the majority of NFTs that have defaulted have no bids

13/17 MAYC
5/9 BAYC
8/11 CloneX
6/8 Doodles

👆 total # of NFTs for auction with no bid/total # of NFTs for auction (so, for example, 4 MAYC have bids)

(3/9)

— NFTStatistics.eth (@punk9059) August 21, 2022

NFTStatistics.eth suggested that the platform team is waiting for a market revival and higher quotes, or intends to sell assets to a market maker at a discount to obtain liquidity.

“Currently these NFTs participate in BendDAO auctions, not on exchange trades. Why? Because no one is bidding on them. The DAO has stocked up on them and is holding them,” said the expert.

Co-founder of BendDAO, using the alias CodeInCoffee.eth, said the team is working on a proposal to change the protocol’s parameters. The changes will take effect 24 hours after publication on the forum.

Writing a proposal to improve the protocol, including some parameters change, will post in the forum today and will effect 24hours after voting, hope that WAGMI.

— CodeInCoffee.eth (@CodeInCoffee) August 22, 2022

He noted that the depletion of the contract was caused by hopeless debts totaling around 278 ETH. However, action should have been taken earlier, admitted the platform’s co-founder.

Evaluating the proposed changes, Cirrus wrote that reducing the trading window to 4 hours “will definitely improve auction liquidity,” and a lower liquidation threshold will prevent a reaccumulation of hopeless debts.

In July, the volume of trades on the secondary NFT market fell by 26% versus the prior month, to $647.2 million.

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