The BendDAO community is currently voting to make short-term changes to the platform as the project tries to escape an ongoing liquidity crisis.
BendDAO is an NFT lending platform. Lenders deposit Ethereum (ETH) to earn interest, and borrowers can get loans using their NFT as collateral. The platform supports 7 major NFT collections as collateral, including popular projects such as Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Doodles, CryptoPunks, Azuki, and CloneX.
A number of borrower traders have already fallen into default due to rising interest rates on loans on the platform and the drop in the NFT floor price they chose, typically the NFT BAYC floor price that hit the bottom of 2022 earlier this week.
On the other hand, re-lenders are extremely worried about BendDAO’s next action, which will likely withdraw their funds from the platform, as NFTs used as collateral are now at risk of being liquidated. Although it has been auctioned to repay debt, the demand for liquidity and users is very small.
Therefore, BendDAO proposed a vote on August 22 to resolve the difficulty by changing these indicators. The vote called for a 5% reduction in the weekly rotational liquidation threshold. The change will start at 85% on August 30 and until 70% on September 20.
This threshold refers to the difference between the floor price and the starting bid that a liquidator can set when an NFT from a defaulted loan is entered into the auction process. The vote also called for reducing the auction lockup time from 48 hours to 4 hours for liquidators, helping them not be too passive in the rotation of their capital.
At the time of writing, early voting figures show overwhelming support for the proposal. The majority of BendDAO community members with a total of 20 million veBEND tokens voted in favor of the proposal representing 97.09% of the approval for the protocol changes.
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