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NFT Collateralization on BendDAO: How Does it Make NFT Lending and Borrowing Easy?

NFTs are a hot asset class, but they create some challenges when it comes to liquidity. BendDAO is the first NFT liquidity protocol that provides users with an all-in-one solution for NFT lending and borrowing. In this article, we’ll look at BendDAO’s features and how they can help users maximize their NFT investments.

BendDAO Features

BendDAO’s solution provides unique features that make NFT lending and borrowing easy. These include:

  1. Instant NFT-backed loans: BendDAO allows users to borrow money against their NFTs without having to liquidate them. These loans are an excellent way for users to access funds quickly without sacrificing ownership of their assets.
  2. Collateral Listing: Users can receive instant liquidity up to 40% of floor value, which is made possible by providing an instant NFT-backed loan to the seller. Upon purchase, the buyer pays off the loan and its respective interest accumulated over time.
  3. Instant NFT-backed loans: BendDAO’s listing feature makes listing your NFT as collateral easy, allowing other users to borrow ETH against it. By doing so, users can earn passive income from their NFTs without liquidating them.
  4. NFT Down Payment: BendDAO’s unique down payment feature allows users to use their NFT as collateral when purchasing assets. The buyer can pay 60% to buy a blue chip NFT and pay the remainder using a flash loan from AAVE. The buyer repays the borrowed amount using an instant NFT-backed loan on BendDAO. Borrowers can list their mortgaged NFTs for sale.

What makes Bend DAO stand out from competitors?

BendDAO stands out from its competitors by having a unique suite of features. These features make it easier for users to access liquidity without sacrificing ownership of their assets. They include:

Liquidation protection

BendDao is committed to providing a secure and reliable DeFi platform for its users, so you may choose to borrow funds on the platform despite exposure to market risk. Furthermore, BendDao offers special loan contracts with 24-hour protection to minimize unforeseen liquidation risk. For example, if a user’s loan interest returns become negative, they will have 24 hours to repay the loan. In this window, no liquidations will happen, and the user can plan appropriate steps toward repaying the debt without suffering unexpected losses from liquidations. As a result of this policy, borrowers can frontload their payback strategies to avoid damage from extreme market events during their DeFi engagement.

Right to get airdrops

BendDAO allows NFT holders to retain the same airdrop rights regardless of whether their assets are in the collateral pool. 

When users borrow against their NFT, they remain eligible for any airdrops associated with that NFT. While the borrower’s asset is in the collateral pool, BendDAO will collect and distribute any awards their boundNFT holders receive accordingly. Additionally, with their Flashloan feature, borrowers can claim airdrop rewards on other platforms while keeping their NFTs in the pool. BendDAO ensures every user maintains their rights while enabling them to access liquidity when needed.

NFT safety

BendDAO converts NFTs into ERC721 boundNFTs, removing the risk of theft, as they are non-transferable. At the same time, these boundNFTs offer the same self-expression benefits as traditional NFTs, such as using them as avatars on Web2 social media platforms. 

Combining fungible loan tokens with an interchangeable digital expression allows owners to express their tastes and interests creatively while remaining secure against theft. In this way, BendDAO sets itself apart from other NFT audiences.

List of supported NFT collections

BendDAO currently supports the following NFT collections:

  • BoredApeYatchClub (BAYC)
  • Cryptopunks
  • MutantApeYachtClub (MAYC)
  • Azuki
  • Moonbirds
  • Doodles
  • Space Doodles
  • CloneX

Bend Token

BendDAO recognizes BEND as its governance token, allowing holders to stake and receive vote-escrowed BEND (veBEND) in return. The potential benefits for veBEND holders are extensive; beyond just voting rights, they can access a share of the platform’s lending revenue and half of the exchange and down payment fee income generated by BendDAO. All these rewards are available simply through owning and voting with veBEND!

veBend token

Earning money with veBEND is an exciting proposition for many people. With veBEND, users can receive ETH rewards simply by staking their BEND tokens. No minimum or maximum amount needs to be staked, allowing users to receive proportionate rewards based on how many veBEND tokens they hold.

Once a user stakes their BEND, the protocol instantly rewards them with veBEND, allowing them access to the ETH rewards shared among all the participating veBEND holders.

Every week, BendDAO distributes the ETH rewards, and users can track both the Average Locking APR and their own Locking APR available on the Lock BEND page, making it easy to keep track of their earnings.

With this transparency plus the ability to earn passively with ETH rewards, veBEND has become a popular choice for staking BEND tokens on the platform.

APE NFTs staking on BendDAO

BendDAO Ape (BAKC, Apecoin, BAYC, and MAYC) staking allows users to earn yield with their existing Yuga Lab assets. In addition, users can quickly join and let the staking contract handle their investments, so you don’t need to worry about manually managing each one.

Staking with ApeCoin and Non-Fungible Tokens (NFTs) on BendDAO is simple. All you need to do is deposit your Ape to the BendDAO wallet, and BendDAO will initiate a pairing listing. This listing allows holders of ApeCoin tokens to join a staking pool with their boundNFT.

If a user sells their NFT before uncommitting, they can lose their paired APE earnings, as highlighted by Horizen Labs. Therefore, BendDAO requires that users deposit their NFTs before pairing to protect their interests. Additionally, users can borrow Ethereum from the lending pool during staking activities – creating the ideal solution for investing using this platform.

BendDAO rewards

BEND DAO offers lucrative rewards for users in the lending and borrowing system. They are entitled to 40% of all BEND tokens earned in a 1:3 Lend/Borrow Incentive ratio. Additionally, protocol incomes collected from lending and trading on BendDAO are rewarded to eligible BEND stakes (veBEND holders) every 24 hours and are claimable in either WETH or ETH. Moreover, rewards from the system do not have any expiration date, so users can claim them at their convenience.

The BendDAO generates income from various sources, the most significant of which are interest collected from borrowers, trading fees collected from sellers, and down payment fees collected from buyers. Therefore, BendDAO has set a default percentage of 30% for interest, 2% for trading fees, and 1% for down payment fees. This streamlined approach simplifies calculating expected revenue and tracking amounts gained or lost on any transaction.

5 Risks associated with using the BendDAO protocol

BendDAO protocol focuses on providing users with liquidity solutions and getting yields from staking tokens. As such, it poses particular risks that users should be aware of; these include:

1. Unstable prices: Prices of NFTs and cryptocurrencies often fluctuate, making it difficult to predict the expected returns from any given transaction accurately.

2. Liquidity Risk: There may need more liquidity in the market for users to execute their desired transactions in the case of high demand.

3. Regulatory risk: Certain regulatory risks are associated with using the BendDAO protocol that you should consider before using the platform.

4. Counterparty risk: When users engage in transactions on BendDAO, they could face counterparty risk, meaning that one side may not fulfill their agreed-upon obligations.

5. Technical risk: As with any software-based system, there is the potential for technical issues to arise that could affect users’ ability to use the platform as intended. These risks include potential problems related to network latency, data synchronization, and other technology-related issues.

Users can confidently use the BendDAO protocol to access NFT-backed liquidity by understanding these risks and taking appropriate precautions.

Conclusion

The BendDAO protocol provides an innovative solution to the liquidity crisis many NFT holders face. Offering instant NFT-backed loans, Collateral Listing, and NFT Down Payment options creates a closed loop for users looking to access their wealth efficiently. Additionally, staking tokens through veBEND allows users to earn rewards while helping to strengthen the BendDAO network. However, users should be aware of the potential risks of using this protocol and take appropriate precautions before proceeding.

Ultimately, with the help of BendDAO, users can now access their NFTs safely and reliably, allowing them to easily access liquidity and unlock the potential of their digital assets.

FAQs

What are BendDAO bound NFTs?

Bound NFTs are tokens tied to the BendDAO protocol, allowing them to be subject to various services such as Instant NFT-backed loans, Collateral Listing, and NFT Down Payment.

How can I earn rewards by staking veBEND?

Eligible veBEND holders can earn rewards from protocol incomes by staking their tokens.

What are ERC 721 tokens?

ERC 721 tokens are non-fungible tokens (NFTs) in the Ethereum blockchain. Each token is unique, with its own set of attributes and characteristics.

What happens if I default on my loan?

If you default on your loan, the protocol will liquidate the collateral, and all proceeds will go to the lender. Any remaining debt not paid off by the liquidation will still be due to the lender.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Alden Baldwin

Journalist, Writer, Editor, Researcher, and Strategic Media Manager:With over 10 years of experience in the digital, print and public relations industries, he has been working with the mantra, Creativity, Quality and Punctuality. In his waning years promises to build a a self sustaining institute that provides free education. He is working towards funding his own startup.As a technical and language editor, he has worked with multiple top cryptocurrency publications such as DailyCoin, Inside Bitcoins, Urbanlink Magazine, Crypto Unit News and several others.He has edited over 50,000+ articles, journals, scripts, copies, sales campaign headlines, biographies, newsletters, cover letters, product descriptions, landing pages, business plans, SOPs, e-books, and several other kinds of content.

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