Last Updated on August 23, 2022 by Bitfinsider

As the project strives to steer clear of a developing liquidity crisis, the BendDAO community is presently voting to make short-term reforms to the non-fungible token (NFT) lending platform.

In the proposal, it stated: “We are sorry that we underestimated how illiquid NFTs could be in a bear market when setting the initial parameters […] After a comprehensive review and discussion, it’s time to make a proposal to help ETH depositors to build confidence.”

BendDAO is commonly known as an NFT lending platform. Borrowers can receive loans using their NFTs as security, and lenders deposit ether (ETH) in exchange for interest.

Seven significant NFTs, including Bored Ape Yacht Club, Mutant Ape Yacht Club, CryptoPunks, Azuki, and CloneX, are supported as collateral by BendDAO. Due to the platform’s increasing interest rates for loans and the NFTs’s dropping floor price value, a number of borrowers have fallen behind on their payments.

Concerned about the project’s viability, lenders have taken their money off the platform. The NFTs pledged as security for unpaid loans are currently in jeopardy of liquidation. A few things are already up for auction, but there isn’t much interest.

The low demand is due to a few factors. For instance, the BendDAO protocol requires that starting bids be more than the debt’s value and 95% of the underlying NFT collateral’s floor price. Second, auction liquidators are required to lock away their ETH for a period of 48 hours. Both criteria are unattractive to liquidators since the debt’s value may exceed the floor price, rendering the deal unworkable.

The referendum taking place today, which will be completed on Tuesday, aims to alter these restrictions. The vote mandated a weekly rolling 5% lowering in the liquidation threshold. The new percentage will range from 85% on August 30 to 70% on September 20.

The disparity between the floor price and the beginning bid that liquidators may submit when an NFT from a defaulted loan is put up for auction is referred to as this threshold. The 48-hour auction lock-up time was to be shortened to 4 hours per the vote.

The number of early voters suggests support for the vote. 20 million veBEND tokens have been cast by members of the BendDAO community in favor of the proposal, which represents a 98% acceptance rating for the protocol improvements.

The native token of the system is called BEND, and its staked variant, veBEND, grants holders voting rights. If supporters can gather up to 47 million veBEND tokens in the polls, the vote will be approved.

Hardware wallets are safe and secure devices that can be used offline. They keep your cryptocurrency offline, making it impossible for you to be hacked.

To find out more on the leading hardware wallets, you may view our reviews here: Ledger & Trezor

Are you new to investing and would like to find out more about investments and cryptocurrency? If you know nothing about a topic and want to become an expert on it, one fool proof way to start is to read good books about the topic.

If you read one book about a topic, you will be able to share knowledge or discuss the topic at an elementary level with almost everyone.

Read three books and you will likely know more than the majority of people and will be able to discuss the topic at an intermediate to expert level.

1. The Intelligent Investor by Benjamin Graham
2. Crypto Investing Guide: How to Invest in Bitcoin, DeFi, NFTs and More by Ian Balina
3. The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology That Powers Them by Antony Lewis

Disclaimer: Above are some affiliate links and we may collect a share of sales or other compensation from the links on this page.

Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.