Bend DAO has been almost completely drained of liquidity as the sustained fall in the BAYC floor price concerns the NFT market at large.

Bend DAO has no ETH left

Bend DAO is the most popular platform for taking out loans against NFTs as collateral, and has been a huge success thus far. Those with Doodles, Azukis, CloneX or Apes are welcome to post their NFTs as collateral and borrow against them.

Alternatively, people can support the project by lending out ETH to the borrowers.

The issue arose that it has not been possible to liquidate the NFTs that ought to have been liquidated: the problem with fungible tokens is that one has to make a bid on that specific NFT, and if people know that the holder may be forced to accept a lower price they will wait (force the price down).

BAYC holders down 75% from ATHs

Since the peak of the market in May, the Bored Ape Yacht Club floor price has fallen from a high of just over $400k to around $100k today, a 75% decline.

During its first year of operation, the BAYC community had almost the perfect chart: very few downwards swings and relatively consistent progression to the upside in price, at least in ETH terms.

This helped propel the BAYC to become one of the largest and most widely-recognisable NFT collections.

However, since reaching the peak of the NFT bull market, it appears that the community has come to experience its first bear market.

A 75% decline is enough to rattle the holder of any asset, but the Ape community is strong, and doesn’t appear to be going away any time soon.

A Pudgy Penguin sold for 400 ETH – manipulation?

The NFT community has been surprised over the last 24 hours, as a Pudgy Penguin sold for 400 ETH.

The news comes after the PP community was celebrating a 400% price rise from the lows of the market, and celebrating the end of the ape-themed dominance in the NFT space.

However, they may have jumped the gun somewhat, with many accusing the founder of PP of manipulation (again).

The penguin in question does have a high degree of rarity, but speculators are struggling to explain how this could justify 400 ETH ($640,000).

Pudgy Penguin 400 ETH

For some context, the PP community is one of the largest and most established NFT communities in the space, and has a huge following. People are largely enamoured with the penguins, which are very cute.

Nevertheless, the project has been mired in controversy several times now. The founders have been accused of incompetence and not running the project properly, although this could have been due to a lack of experience rather than malevolence.

Earlier in April, the entire collection was bought for 750 ETH ($2.5m at the time) by Luca Netz. The deal put the collection under his management rather than the founder Cole’s, and the community has been enthusiastic about this change of leadership, as Luca Netz appears to be an experienced entrepreneur who knows how to scale brands.

The future of NFTs: monkeys versus penguins

The full extent of the fallout from Bend DAO is yet to be fully realised, but it is unlikely that these communities are going away any time soon.

One of the reasons that the Bored Ape community doesn’t seem as bothered by the decline as many retail investors who bought alt coins that have performed just as badly, is because not only are most ape holders already incredibly wealthy anyway, but also they have received airdrops to counterbalance the decline in floor price.

Many Apes received an unexpected airdrop of $APE token, and these airdrops were worth millions of dollars for some of the largest whales in the community.

Those calling for monkeys to be superseded by the rise of penguins (or even the rise of Seals) may be mistaken. It is likely that the Pudgy Penguins are overhyped and even though they are under new management, Yuga Labs is a company that has scaled to be worth billions of dollars and has several other NFT collections acquired too: it seems unlikely that the Pudgy Penguins will be able to overtake this.

Even if Bend DAO collapses and, in a worst case scenario, leaves a blot on the space of posting NFTs as collateral, it won’t be a problem for the NFT space more generally – NFTs are clearly not ideal collateral, and people to ought to be aware of the difference between Bitcoin’s “pristine collateral” and NFTs’ wild and manipulated volatility.

There is fear in the markets at the moment, but that ought not discourage long term investors, especially those who subscribe to the maxim of “buy when there is blood in the streets”.

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