A few months ago, NFTs (Non Fugible Tokens), these digital certificates on blockchain that attest to the ownership of a digital good or asset, were experiencing a bewildering craze. Some of these tokens were exchanged for sums that sometimes reached several million euros. But the crypto winter has come and gone and while in the wake of the Bitcoin, Ethereum and other major blockchain dips, NFTs have fared better, it now seems like the party is (at least temporarily) over.
A striking example is the Bored Ape Yacht Club collection whose price of NFTs has fallen to a level not seen since their launch. In all, according to 01Net, the crypto market (NFT included) has gone from a total capitalization of 3000 billion dollars to nearly 1000 billion dollars in the space of a few months. This capital flight is not without consequences for the blockchain ecosystem.
The NFT market is doing poorly, but the worst is probably yet to come
Many investors steer clear of the market altogether due to lack of cash or the prospect of gains. And actors from lending crypto like BendDAO – which offers NFT deposit loans as collateral – are now threatening to cause another crash. Indeed, BendDAO is based on an algorithm that implies that NFTs pledged as collateral are automatically sold once their value drops below a certain threshold. A massive automated sell could drag the entire market into an abyss…
However, as 01net reports, the figures are not good. Many assets are about to be liquidated because of their value. This reinforces the reality of this risk. BendDAO officials nevertheless intend to react, by raising the liquidation threshold to 70% and by passing the protection period (period during which the loan holder can repay the sum to avoid the sale of an NFT) from 48 hours to only 4 hours. .
Also Read – Guide to NFTs… how to buy Non-Fungible Tokens?
An idea that still needs to be validated by the BendDAO community after a vote. It remains to be seen whether this measure will only be enough to save BendDAO – and whether it can also help the NFT market survive the crypto winter.
