Daily Flash | NFTfi Bend DAO Received 99% In Favor of New Proposal To Stabilize ETH Reserve, BTC, ETH Remained Technically Resilient Above Support Levels As Traders Await Macroeconomic Data

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Today's Headline - NFT lending protocol Bend DAO proposes emergency changes amid credit crisis

BendDAO, an “NFTfi” protocol that lets NFT holders deposit their assets as collateral to borrow ETH, has recently suffered from a bank run that drained BendDAO’s reserves to a Sunday low of five ether (ETH) from more than 10,000 wrapped ETH.

BendDAO’s reserves briefly fell to 0.75 ETH early Monday. According to Etherscan data, the DAO’s wallet has since received a small influx of funds and now holds roughly 688 ETH.

BendDAO co-founder, a Bored Ape Yacht Club NFT holder who goes by CodeInCoffee.eth, put out a new proposal to community vote Monday in an effort to stabilize the DAO’s finances and restore confidence in the lending protocol.

As of Monday afternoon, over 99% of voting BendDAO members have voted in favor of the proposal with its quorum already reached, signaling the motion will likely pass and take effect Tuesday morning.

The proposed changes would see BendDAO gradually lower the liquidity threshold to 70% from its current 95%, shorten a liquidation amnesty window from two days to four hours and increase interest rates to incentivize more ETH deposits and repayments.

The way BendDAO currently works is by enabling users to deposit high-value NFTs into the service and receive up to 40% of the asset's "floor price" as a loan in ETH. On the other side, users who deposit and lend out their ETH earn interest on those deposits. But the incentivizes were evidently misaligned, and an imbalance of borrowers and lenders has caused a lot of bad debt to go unpaid.

As floor prices have tumbled in recent months, so much so that 45 of the 272 Bored Apes with BendDAO loans tied to them are now in the platform's “danger zone,“ when an NFT used as collateral is close to being auctioned off. In other words, $5.3 million worth of Bored Apes are at risk of being liquidated.

A mass liquidation event could also have implications for other NFT lending services, which have risen to prominence in the past year as the NFT industry has exploded in popularity. This also means many valuable NFTs, including Bored Apes, CryptoPunks, Azuki, and CloneX assets, could be forcibly sold from their owners.

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Chart of the Day - Bitcoin Total Transfer Volume Breakdown: Glassnode Onchain Report

As of this writing,
Bitcoin (BTC) is changing hands at around $21,271, down 0.63% in the past 24 hours,
while Ether (ETH) is trading at $1,619, or up 1.25% during the same period.
Major altcoins are showing a mixed of gains and losses, notably Cosmos (ATOM) is up by 12.8%, while Cardano (ADA) is down by 0.13%, Solana (SOL) -2.82%, Polkadot (DOT) +0.45%, and Avalanche (AVAX) +0.17%.

Notable gainers include:
Sperax (SPA) at $0.0163 (+23.52%),
Chiliz (CHZ) at $0.224 (+21.64%),
EOS (EOS) at $1.84 (+20.13%).

Notable losers include:
Celsius Network (CEL) at $1.72 (-19.72%),
XYO (XYO) at $0.00844 (-11.15%),
Qredo (QRDO) at $0.253 (-10.93%).

This week, Fed Chair Jerome Powell is expected to speak at the Economic Policy Symposium, which begins Friday, to provide insight into the pace in which the Federal Open Market Committee (FOMC) will increase rates for the remainder of the year.

According to the CME FedWatch tool, the probability of a 75 basis point interest rate increase has risen to 54.5% from 47% one day prior.

The tech-focused Nasdaq and S&P 500 both sank over 2%, and the Dow Jones Industrial Average (DJIA) nearly as much as markets returned to the more risk-averse climate from earlier in the summer. Notably, the Volatility S&P 500 Index (VIX) spiked on Monday to 20.6 to 23.8.


However, if the bulls fail to protect the current support level, the bears will likely attempt to push the price towards the next support zone which is form between the monthly support level at $19,858 and $18,975, a strong daily support level between Jun. 18 - Jul. 13.

Notably, the 127.2% - 141.4% Fibonacci extension levels (drawn from Aug. 13 - 19) also reinforce the likelihood of the aforementioned support zone.

If the bulls are unable to hold above the current support zone but are able to hold above the $19,858 monthly support level, then we may see a slight rebound to the psychological level of $21,000.

On the contrary, if the bulls manage to push to price toward the 12-Day EMA ($22,313), which momentarily coincides with the 23.6% Fibonacci level ($22,330) measured from Mar. 28 - Jun. 18, and hold above $21,515 which is the last price of Sunday trading, then we may see a stronger rebound towards the $23,470 weekly resistance level.


If buying start coming in at this level, then we may see the price of ETH heads toward the 12-Day EMA ($1,711). A break above the EMA may bring the price to retest the 50% Fibonacci level ($1,775) which together with the weekly resistance level of $1,800, form a strong resistance zone.

On the contrary, the next closest support level appears to be the 38.2% Fibonacci level ($1,500) measured from Apr. 3 - Jun. 18, which forms another support zone with a monthly support level of $1,428. If the bears manage to push the price below this zone, the price of ETH will likely plunge towards $1,300 to a possible low of $1,250 in the short term.

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Influencer of the Day - Canaan exec says opportunity outweighs crisis as Bitcoin miners struggle with shrinking profits: Cointelegraph Report

Crumbling crypto prices equate to diminishing profits for Bitcoin miners and this week’s regulatory action by the United States lawmakers requesting energy consumption data from four major BTC mining companies is bound to exert a bit more pressure on an already fragile situation.

On Monday, Canaan senior vice president Edward Lu spoke with Cointelegraph head of markets Ray Salmond about how industrial Bitcoin miners have matured and the new synergies they have created with the oil and gas and big energy sector in the United States and the Middle East.

In Edward’s original statement,

“I started in this industry a few years ago, and when we started this industry, it was a lot of Chinese entrepreneurs who were mining. They were all individual entrepreneurs with passion who believed in this industry…

From the individual Chinese entrepreneur to now, more and more, I see that our long-term partners of Canaan and Avalon are traditional energy companies, institutional investors, financial-institutional clients and traditional financial investors…

…Energy companies step in because of the ability to use wasted energy and surplus daytime and nighttime energy. And this helps them to use these wasted energies and convert them into a storable value…

…this changes the picture. This gives us more professionalism, transparency and long-term goals in the mining industry.”

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Buzzes of Yesterday - #Pudgy Penguins Pump 83% As Meta Joins Board, #Samsung Among Others File to Launch Crypto Exchange, #Telegram CEO Proposes Turning Usernames into NFTs

Web3

BAYC Floor Price Crashes to 67 ETH, Lowest in 8 Months

Ronin Hackers Transferred The Stolen $625M from ETH To BTC And Used Sanctioned Mixers

Pudgy Penguins Ethereum NFTs Pump 83% As Meta, Nansen Execs Join Advisory Board

Former OpenSea employee accused of insider trading files motion to dismiss indictment

GameStop NFT daily fee revenue plunges under $4K as gloom infects markets

Sepolia Is the First Ethereum Testnet to Get a Post-Merge Upgrade

Business & Finance

Samsung files to launch Bitcoin and crypto exchange in South Korea in 2023

Telegram CEO Proposes Auctioning Usernames, Links As NFTs

Governments & Policies

Australia to Map Crypto Tokens as Part of Regulatory Ramp-Up

Author: Gate.io Researcher Peter L.

This article represents only the researcher's views and does not constitute any investment advice.

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