An Ultimate Guide to NFT Lending Protocol BendDAO (BEND)

• Anshika Bhalla
• November 21, 2022

One of the key issues to consider when determining the worth of NFTs includes liquidity. A few initiatives have entered the NFT platform to address the problem. The finest illustration of this is the BendDAO NFT liquidity algorithm. It’s a lucrative solution to achieve NFT liquidity. What for? NFTs generally have values that make it challenging to sell the asset when the owner has a financial need.

Imagine getting a $20,000 NFT project inside your wallet that you can use as collateral for a $10,000 loan to fund an emergency expenditure. An NFT liquidity mechanism like BEND could help you throughout this situation.

About BendDAO

A liquidity mechanism can be called the BendDAO concept. With non-fungible coins, BendDAO represents the first-ever decentralized liquidity mechanism functioning as peer-to-pool. NFT holders can take ETH loans by keeping their assets as security on BendDAO. The NFT collateral-backed quick loans, NFT down payments, and collateral listing are all supported by the BendDAO crypto protocol. Customers may get a one-stop shop for NFT projects thanks to the flexibility of utilizing the listing, down a deposit, and lending services inside a closed system.

How does BendDAO Function?

When asked, “what’s BendDAO,” the response piques interest in its operation. Like other NFT liquidity methods, BendDAO doesn’t emphasize the fragmentation among NFTs to achieve liquidity. The BendDAO mechanism allows customers to instantly use non-fungible currencies as security deposits to borrow ETH loans.

Loans secured by NFT collateral are available through the lending pool maintained by liquidity providers. The BendDAO platform supports several renowned NFT projects, including Azuki, CryptoPunks, MAYC, BAYC, and numerous others. This platform benefits from the blue-chip NFT projects’ guarantee of their liquidity and worth.

Significant Elements of the BendDAO Protocol

The second important feature of the BendDAO protocol that you should understand relates to the services it offers users. Instead of keeping their money secure in their accounts, BendDAO offers alternatives that can help NFT experts obtain greater liquidity on their holdings. The decentralized peer-to-peer mechanism for NFT liquidity additionally provides a variety of other goods to assist users in boosting their income. The preceding are BendDAO’s three main product lines.

• Quick Loans with NFT Collateral

Customers are primarily provided with immediate NFT-backed loans to support NFT liquidity. The holders can utilize their NFTs to obtain ETH loans through a borrowing pool instead of keeping them in reserve. Depositors that provide ETH liquidity towards the lending pool can get suitable interest on their money. BendDAO provides the chance for safe leveraged trading with immediate loans by keeping non-fungible tokens as collateral.

• Contingent Listing

Again for the benefit of borrowers, the service for quick NFT-backed loans via BendDAO also integrates basic collateral listings features. Before a sale, NFT experts may get quick loans of up to 40% of the base worth of the listing. Buyers might repay the loan and the anticipated interest after the transaction. Borrowers who’ve already taken out loans using the BendDAO NFT platform may use the specific collateral listing feature. After deducting the debt and paying the interest, the lender or supplier will get the stipulated loan amount.

• Making a down payment on NFTs

The ability to purchase NFTs with such a down payment is BendDAO’s next significant selling point among its services. You need to put down 60% of the total NFT price and can get top-tier NFTs from popular NFT platforms. The BendDAO method fixes up another instant loan via AAVE at the same time for the payment of the NFT charge left. This flash loan is now being repaid with the aid of the immediate NFT-backed lending facility on the NFT liquidity mechanism. Consequently, BendDAO’s closed-loop system of services may eventually include NFT experts.

Benefits of BendDAO for the NFT Society

The description of how BendDAO operates makes it clear to NFT experts the advantages of using NFT liquidity with the BendDAO cryptosystem. Also, it’s crucial to consider any advantages it could have for the greater NFT platform. We are mentioning some prominent benefits of BendDAO for NFT development.

• Rights to Equal Airdrop

With the BendDAO mechanism, the mortgage holders would’ve been fairly represented in all airdrops involving NFT experts. BendDAO makes sure that all airdrops are collected and then distributes them fairly to boundNFT owners who’ve already placed their NFTs as security. Borrowers may now execute rights on NFT payouts on other procedures and credit goes to the decentralized p2p liquidity mechanism for NFTs. Whereas the NFTs are kept in the BendDAO collateral pool, the Flashloan function enables borrowers to collect their incentives.

• Unafraid of Theft

Using the ERC-721 protocol, collateral non-fungible currencies are converted into representation-bound NFTs in conjunction with the immediate loan offers on BendDAO. The prohibition on shifting bound NFTs currently provides a reassuring guarantee of safety from robbery. 

• Protections for Liquidity

These 24-hour protections for liquidation are a vital value advantage of BendDAO NFT guidelines for the NFT platform. Borrowers might also consider the advantages of using BendDAO to eliminate loss threats from market. A 24-hour liquidation safety period is provided by the non-fungible currency liquidity mechanism, allowing you to pay back the loan & prevent losses from NFT price volatility. Numerous NFT experts are looking to liquidate their NFTs. They can obtain NFT liquidity with the aid of the liquidation safeguard period without needing to sell the NFTs or take any losses due to price changes.

Pricing for NFT on BendDAO

Another crucial component of the architecture of this innovative non-fungible token availability protocol is the BendDAO market pricing mechanism. By the use of a complex algorithm, it determines NFT floor pricing for borrowed trading upon that platform. The major OpenSea NFT development also provides the original pricing information for NFT price determination on the liquidity mechanism. The Bend group now maintains the NFT pricing oracle related to OpenSea. The administration of the procedures for choosing pricing oracle sources will progressively come under the supervision of the BendDAO governance practices.

When it comes to describe “what is BendDAO” and how well it functions, the cost factor becomes significant. Regarding BendDAO’s pricing issues, you must also be aware of the security proportion. The security proportion represents the maximum number of ETH you are permitted to lend in relation to the minimum price of a particular NFT. The collateral percentage including BAYC and CryptoPunks, is 40%. This collateral ratio drops to 30% for all other NFTs, though. Why? The response would point you toward the NFT risk variables that BendDAO took into account while calculating the value of NFT collateral.

BendDAO NFT Risk Factors

Upon this BendDAO cryptocurrency system for NFT availability, the collateral percentage changes for various NFT deployments. Consumers should also know how the Bend system’s risk evaluation strategy emphasizes marketplace and smart contract concerns. The Bend procedure studies the associated dangers of NFT projects in BendDAO using a clear risk framework. Furthermore, proactive risk assessment reeducee fraction and makes it easier to comprehend on mitigating prospective dangers. Holders of NFT projects might participate actively in the DeFi course with the aid of BendDAO. Nevertheless, the economic risks associated with NFT collateral necessitate the choice 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 five primary key risk factors for NFT availability on the BendDAO system are listed below.

• Many NFT revenue or trading volumes.
• Asset value; also known as the asset’s mean sales value.
• Numerous distinctive wallets are engaging with NFT in dApps from the NFT platform.
• Customer retention, or the proportion of days within the particular time of ative status.
• NFT-related interactions include counting dApp activities with bidding and other NFT-related uses.

Conclusion

The BendDAO NFT liquidity solution development remains in its infancy. But it’s crucial to recognize that it has effectively addressed the issue of NFT liquidity without causing NFTs to collapse. Holders of non-fungible tokens do not need to fractionalize their holdings to benefit from intended liquidity. Clients of the BendDAO mechanism are placed in a locked loop, forced to engage in a never-ending loop between lending and borrowing. BendDAO enables customers to acquire NFTs with a 60% down payment and then a flash loan because of the capability of quick NFT-backed loans, collateral listing, and NFT down payments. The same applies to sellers who can use NFTs as security and get loans. The key high point of BendDAO’s activities is the prompt payment of loans. The Bend protocols can produce positive results for the evolution of NFT liquidity with the certainty of a robust governance structure and even a threat assessment methodology.