NFT lending protocol Bend DAO proposes emergency actions to stabilize ecosystem

Bend DAO, an NFT borrowing and lending protocol, is facing a credit crisis after it was revealed Monday that the protocol only has about 15 Wrap Ethers (wETH) worth about $23,715 to repay lenders. increase. The protocol has lent out 15,000 ETH so far.

To avoid the crisis, the project’s developers Proposed New Emergency Measures It aims to stabilize the Bend DAO ecosystem.

Proposed Emergency Action

First, the development team suggested limiting the collateral liquidation threshold to 70% of the loan value. Reduce from 85%.

Secondly, the NFT auction period will be reduced from 48 hours to 4 hours, removing the requirement that the NFT minimum bid price be fixed at 95% of the OpenSea minimum price.

Third, reduce the loan interest rate from the current 100% to 20%.

Finally, the Bend DAO Treasury will be empowered to use the proceeds to cover all bad debts.

What led to the current Bend DAO situation?

In general, even among the popular NFT collections, many NFTs are in danger of liquidation due to the falling floor price of NFTs in the market. Interest rates on debt-backed NFTs have skyrocketed, reaching almost 100%, so some users prefer to let go of his NFTs rather than pay off their debts, which leads to many bad debts. is occurring. Also, the NFT market is not as liquid as the coin market. This means that there may not be a single bid at NFT liquidation. Something that makes the scenario even more complicated.

A proposal by Bend DAO is currently being voted on by the community. The voting process is expected to last 24 hours, but he has already passed his 47 million veBend required, with 99.23% of voters in favor of the proposal.