One of the main issues to consider when determining the value of NFTs includes liquidity. A few initiatives have entered the NFT platform to solve the problem. The best illustration of this is the BendDAO NFT liquidity algorithm. It is a lucrative solution to achieve NFT liquidity. Why? NFTs typically have values that make it difficult to sell the asset when the owner is in financial need.
Imagine having a $20,000 NFT project in your portfolio that you can use as collateral for a $10,000 loan to fund an emergency expense. An NFT liquidity mechanism like BEND could help you through this situation.
A liquidity mechanism can be called the BendDAO concept. With non-fungible coins, BendDAO represents the very first decentralized liquidity mechanism operating as a peer-to-pool. NFT holders can take out ETH loans by holding their assets as collateral on BendDAO. NFT Secured Fast Loans, NFT Installments, and Collateral List are all supported by the BendDAO crypto protocol. Customers can get one-stop shopping for NFT Projects thanks to the flexibility of using registration, deposit and loan services in a closed system.
How does BendDAO work?
When asked “what is BendDAO”, the answer sparks interest in how it works. Like other NFT liquidity methods, BendDAO does not emphasize sharding between NFTs to obtain liquidity. The BendDAO mechanism allows clients to instantly use non-fungible currencies as collateral deposits to borrow ETH loans.
Loans secured by NFT collateral are available through the loan pool managed by liquidity providers. The BendDAO platform supports several renowned NFT projects, including Azuki, CryptoPunks, MAYC, BAYC and many more. This platform benefits from the liquidity and value guarantee of blue-chip NFT projects.
Important elements of the BendDAO protocol
The second important feature of the BendDAO protocol that you need to understand concerns the services it offers to users. Instead of keeping their money safe in their accounts, BendDAO offers alternatives that can help NFT experts obtain greater liquidity on their holdings. The peer-to-peer decentralized mechanism for NFT liquidity additionally provides a variety of other goods to help users increase their income. The above are BendDAO’s three main product lines.
Fast loans with NFT collateral
Clients primarily receive NFT-backed loans to support NFT liquidity. Holders can use their NFTs to obtain ETH loans through a loan pool instead of keeping them in reserve. Depositors who provide ETH liquidity to the lending pool can earn appropriate interest on their money. BendDAO provides the ability to trade securely with leverage with immediate loans by keeping non-fungible tokens as a guarantee.
Also for the benefit of borrowers, the fast NFT secured loans service via BendDAO also incorporates basic collateral listing functionality. Before a sale, NFT Experts can get quick loans of up to 40% of the base listing value. Buyers could repay the loan and prepaid interest after the transaction. Borrowers who have previously taken out loans using the BendDAO NFT platform can use the specific collateral listing functionality. After deducting the debt and paying the interest, the lender or supplier will get the stipulated loan amount.
Make a deposit on NFTs
The ability to buy NFTs with such a down payment is BendDAO’s next big selling point among its services. You need to deposit 60% of the total NFT price and can get top NFTs from popular NFT platforms. The BendDAO method secures another instant loan through AAVE at the same time for the payment of the remaining NFT charge. This flash loan is now repaid using the immediate NFT-backed loan facility on the NFT Liquidity Facility. Therefore, BendDAO’s closed-loop service system could eventually include NFT experts.
Benefits of BendDAO for the NFT Society
The description of how BendDAO works clearly explains to NFT experts the benefits of using NFT liquidity with the BendDAO cryptosystem. Also, it is crucial to consider all the benefits it could have for the larger NFT platform. We mention some important advantages of BendDAO for NFT Development.
With the BendDAO mechanism, mortgage holders would have been fairly represented in all airdrops involving NFT experts. BendDAO ensures that all airdrops are collected and then distributes them fairly to NFT owners who have already placed their NFTs as collateral. Borrowers can now enforce claims on NFT payments on other procedures and credit goes to the decentralized p2p liquidity mechanism for NFTs. While NFTs are kept in the BendDAO collateral pool, the Flashloan feature allows borrowers to collect their incentives.
By using the ERC-721 protocol, non-fungible currencies as collateral are converted into representation-linked NFTs in conjunction with immediate loan offers on BendDAO. The ban on moving linked NFTs currently offers a reassuring guarantee of security against theft.
These round-the-clock liquidation protections are a key value benefit of the BendDAO NFT guidelines for the NFT platform. Borrowers might also consider the benefits of using BendDAO to eliminate market loss threats. A 24-hour liquidation safety period is provided by the non-fungible currency liquidity mechanism, allowing you to repay the loan and avoid losses due to NFT price volatility. Many NFT experts are looking to liquidate their NFTs. They can obtain NFT liquidity using the liquidation backup period without the need to sell the NFTs or incur losses due to price changes.
Pricing for NFT on BendDAO
Another crucial element of the architecture of this innovative non-fungible token availability protocol is the BendDAO market pricing mechanism. Using a complex algorithm, it determines the NFT floor price for borrowed trades on this platform. The major development of OpenSea NFT also provides the original pricing information for NFT pricing on the liquidity mechanism. The Bend Group now maintains the NFT pricing oracle linked to OpenSea. The administration of the procedures for selecting oracle pricing sources will gradually be placed under the supervision of BendDAO governance practices.
When it comes to describing “what is BendDAO” and how well it works, the cost factor becomes important. When it comes to BendDAO pricing issues, you should also be aware of the safety proportion. The safe proportion represents the maximum number of ETH you are allowed to lend against the minimum price of a particular NFT. The guarantee percentage, including BAYC and CryptoPunks, is 40%. However, this collateral ratio drops to 30% for all other NFTs. Why? The answer would direct you to the NFT risk variables that BendDAO considered when calculating the value of the NFT collateral.
BendDAO NFT Risk Factors
On this BendDAO cryptocurrency system for NFT availability, the guarantee percentage changes for various NFT deployments. Consumers should also know how Bend’s risk assessment strategy emphasizes market and smart contract concerns. The Bend procedure investigates the hazards associated with NFT projects in BendDAO using a clear risk framework. In addition, proactive risk assessment reduces the fraction and facilitates understanding of potential hazard mitigation. NFT project leaders could actively participate in the DeFi courses with the help of BendDAO. Nevertheless, the economic risks associated with NFT guarantees necessitate the selection of NFT projects that can increase BendDAO’s liquidity.
The key performance indicators used by the protocol to assess the value of NFT security are the NFT risk factors on BendDAO. The top five key risk factors for the availability of NFT on the BendDAO system are listed below.
- Many NFT revenues or trading volumes.
- asset value; also referred to as the average asset sale value.
- Many distinct wallets engage with NFT in the NFT platform dApps.
- Customer retention, or the proportion of days in the particular time of active status.
- NFT-related interactions include counting dApp activity with auctions and other NFT-related uses.
The development of the BendDAO NFT liquidity solution is still in its infancy. But it is crucial to recognize that it effectively solved the NFT liquidity problem without causing the NFT crash. Holders of non-fungible tokens do not need to split their holdings to benefit from the liquidity provided. Clients of the BendDAO mechanism are placed in a locked loop, forced to engage in an endless loop between lending and borrowing. BendDAO allows customers to acquire NFTs with 60% down payment and then flash loan due to NFT secured fast loans capability, list of collateral and NFT down payments. The same goes for sellers who can use NFTs as collateral and get loans. The highlight of BendDAO’s activities is the prompt payment of loans. Bend protocols can produce positive results for the evolution of NFT liquidity with the certainty of a robust governance structure and even threat assessment methodology.