OpenSea NFT Volume Drops 99 Percent!
The possibility of the NFT sector collapsing is rising as a result of an ongoing debt problem on the lending platform BendDAO.
The daily volumes on OpenSea, the biggest NFT market in the world, have significantly decreased as concerns about a probable market meltdown have grown. The platform created about 99 percent less volume after dropping from a record high of 405.75 million dollars on May 1 to 5 million.
OpenSea Volume Is At The Lowest Levels Of The Year!
On August 28, the market completed NFT transactions totaling about $5 million, according to DappRadar. This is significantly less than the record high of $405.75 million on May 1 by almost 99 percent. Additionally, the sharp drops in daily quantities were accompanied by just as dramatic a drop in OpenSea users and transactions. This demonstrates that interest in and value for Blockchain-based collections have dropped recently. The dropping floor prices of top digital projects make this reduction even more obvious. For instance, on May 1, Bored Ape's base price was 153.7 ETH. However, in contrast to this, on August 28 it fell by 53% to 72.5 ETH.
NFT prices are priced in the local currency of the Blockchain in which they are released. Thus, a digital collection created on Ethereum is purchased using Ethereum (ETH). This means that if the market valuation of ETH falls, the prices of NFT will fall. A low ETH market is considered to be one of the main drivers behind the weak NFT statistics. The market declines in recent weeks have reduced the value of NFT collections. This directly affects the volume statistics of investors and platforms.
BendDAO Conducted NFT Voting!
In order to make NFT collateral more liquid, BendDAO, a decentralized autonomous organization that enables NFT holders to pledge their digital collections as collateral for loans (in ETH) worth 30 to 40% of the NFT base price, decided to alter the protocol's code last week. The DAO cast a vote in this situation. The vote was held after the value of loans in ETH was increased in dollars due to the growth in the price of Ethereum. On the other hand, as NFT prices dropped, BendDAO's collateral holdings lost value.
As a result of declining ETH prices, BendDAO borrowers are unable to pay back their dollar-denominated loans. They are also going through a time when collateral assessments make it harder for lenders to recover the money they have lent. The recent BendDAO vote reduced the NFT liquidation threshold from 95% to 70%. Additionally, it cut the number of time debtors had to provide NFT collateral from 48 to 4 hours in an effort to avoid liquidation. In other words, if the market's liquidity continues to diminish along with the floor price of NFTs, such as Bored Ape, the decreases could become even more pronounced.