The NFT Lending Protocol Bend DAO Suggests Urgent Adjustments Amid the Credit Crisis!

The Bend DAO development team says they "deeply regret" underestimating the volatility of NFTs in a bear market when determining the initial parameters.

Decentralized nonfungible tokens (NFTs) borrowing and lending protocol Bend DAO developers proposed new emergency measures on Monday to try and stabilize the ecosystem.

It was also discovered on that day that the project had as little as 15 wrapped Ether (wETH) valued at $23,715 to repay lenders. Using this system, people were able to borrow and lend around 15,000 ETH.

The Bend Dao development team proposed capping the collateral liquidation threshold at 70% of the loan value, down from 85%, to protect the protocol from a credit crisis.

Next, it would shorten the two-day bidding period for NFTs on its platform to four.

Then, the minimum bid price of NFTs on Bend DAO would no longer be tied to 95% of the floor price on OpenSea, a popular digital collectibles trading platform.

There will soon be a 20% reduction in the current 100% interest rate on loans.

Once and for all, the BendDAO treasury would have the authority to use earnings to pay off bad debts.

Many NFTs are in jeopardy of being liquidated as interest rates are driven to abnormally high levels and the floor prices of NFTs have collapsed in the bear market, even among reputable collections.

Bad loans have increased as the interest on "debt-secured" NFTs has skyrocketed to nearly 100%, making it more cost-effective for some users to simply abandon their digital collectibles (which are also decreasing in value) than to repay the debt.

The third factor contributing to the downward spiral is that the NFT market is less liquid than the coin or token market, so there may be no bids during the liquidation process of an NFT.

Before the credit crisis, Bend DAO was widely regarded as a premier NFT borrowing and lending platform.

The current proposal has received a majority vote of veBend (97.23%) and will be up for voting for 24 hours.