One of the critical issues to consider when estimating the value of NFTsBendDAO is liquidity. Non-fungible tokens typically have high prices, making it challenging for owners to sell the assets. Recently, a few projects have entered the NFT sector to address the problem. The most acceptable illustration of this is the BendDAO NFT liquidity protocol. It is a creative solution to the issue of achieving the liquidity of NFTs. Why? Imagine having a $20,000 NFT in your wallet that can be used as collateral for a $10,000 loan to cover an emergency expenditure. An NFT liquidity protocol like BEND could help you in this situation. The following discussion will guide you through an introduction to the fundamentals of BendDAO, or BEND, and other parts of how it functions.

Describe BendDAO.

For non-fungible coins, it is the first decentralized peer-to-pool liquidity mechanism. NFT owners can use their assets as collateral on BendDAO and take out ETH loans. The NFT collateral-backed instant loans, NFT down payments and collateral listing are all supported by the BendDAO crypto protocol. Users can get a one-stop shop for NFT liquidity thanks to the flexibility of using the listing, down payment, and borrowing services within a closed loop. Find a trustworthy starting point for a manual on the new liquidity protocol in the definition of BendDAO.

How Does BendDAO Function?

The response piques interest in its operation when asked, “What is BendDAO?”. Like other NFT liquidity protocols, BendDAO doesn’t focus on breaking up NFTs to make them more liquid. With the support of a novel mechanism developed by BendDAO, users can now use non-fungible tokens as security deposits to instantly borrow ETH loans. The BendDAO platform supports many well-known NFT collections, such as BAYC, CryptoPunks, MAYC, Azuki, and many more. The venue benefits from the blue-chip NFT collections’ assurance of their liquidity and value. Liquidity providers keep a lending pool where NFT collateral can be used as security for loans.

The second important thing you should know about the BendDAO protocol is what services it gives to users. BendDAO gives NFT holders alternatives to keeping their money safe in their wallets. These alternatives can help NFT holders get better liquidity on their holdings. The decentralized peer-to-peer protocol for NFT liquidity also gives users access to a wide range of other goods that can help them make more money. The following are BendDAO’s three main product lines:

Quick Loans with NFT Collateral

The primary way that NFT liquidity is supported is by giving users instant loans backed by NFTs. Owners can use their NFTs to borrow ETH loans through the lending pool rather than keeping them in reserve. People who put money into the lending pool through ETH can get interested in their money. Based on immediate loans backed by NFT collateral, BendDAO makes it possible to trade safely with leverage.

Contingent Listing

For the benefit of borrowers, the collateral listing feature is built into BendDAO’s facility for quick NFT-backed loans. Even before a sale, NFT owners could get quick loans of up to approximately 40% of the listing price. Upon closing the transaction, buyers might pay off the loan in full along with the anticipated interest. Borrowers who have taken out loans through the BendDAO NFT protocol may also use the direct collateral listing feature. After taking out the debt and paying the claim, one would give the loan amount to the borrower or seller.

Making a down payment on NFTs

BendDAO’s next big selling point among its services is that you can buy NFTs with a down payment. By putting down 60% of the actual NFT price, buyers could purchase top-tier NFTs from well-known NFT markets. The BendDAO protocol also starts a flash loan through AAVE at the exact moment to pay the remaining NFT charge. The flash loan is now being repaid with the aid of the instant NFT-backed lending facility on the NFT liquidity protocol. As a result, BendDAO’s closed loop of services may eventually include NFT buyers. By paying a down payment for NFTs on BendDAO, buyers become borrowers. However, NFT sellers can change roles and become borrowers by mortgaging their NFTs in exchange for ETH loans. The never-ending cycle can draw in many users and repeat itself.

Benefits of BendDAO for the NFT Community

The description of how BendDAO operates makes it clear to NFT owners the advantages of NFT liquidity with the BendDAO cryptosystem. It’s also essential to think about how it might help the NFT community as a whole. Here are a few important benefits of BendDAO for NFT communities.

Rights to Equal Airdrop

With the BendDAO protocol, all airdrops for NFT holders would be fair to the borrowers. BendDAO makes sure that all airdrops are collected and then gives them out to people who own boundNFTs and have put their NFTs up as security. Thanks to the decentralized p2p liquidity protocol for NFTs, borrowers can now make claims on NFT payouts on other protocols. Even though the NFTs are still in the BendDAO collateral pool, borrowers can still get their incentives through the Flashloan feature.

Unafraid of Theft

With BendDAO’s instant loan offerings, collateral non-fungible tokens are turned into representations of boundNFTs. This is done by following the ERC-721 standard. The prohibition on transferring boundNFTs now provides a reassuring guarantee of safety from theft. The digital look of the boundNFT is the same as that of the NFT avatar, and it can be used on web2-based social media networks that support the NFT avatar. For instance, even in the form of boundNFT, a BAYC NFT would still resemble the digital ape.

Protections for Liquidity

A critical value of the BendDAO NFT protocol for NFT communities is that it protects against liquidation for 24 hours. Borrowers could also consider the benefits of using BendDAO to prevent any losses brought on by market swings. The non-fungible token liquidity protocol gives you 24 hours to pay back the loan and avoid losing money because the price of NFTs goes up and down. Numerous NFT owners are reluctant to part with their NFTs. With the liquidation protection period, they can get cash from their NFTs without selling them or losing money because of price changes.

Creating a Twitter group for the upcoming #ApeCoin Staking 🦍

How to join?
– Follow @BendDAO
– Interact with this tweet#ApesTogetherStrong https://t.co/1BJT0qgwrf

— BendDAO.eth (@BendDAO) October 17, 2022

Pricing for NFT on BendDAO

Another essential part of creating this new liquidity protocol for non-fungible tokens is the BendDAO price discovery mechanism. Using a complicated algorithm, it figures out the NFT floor prices for leveraged trading on the platform. The central OpenSea NFT marketplace also shows NFT prices on the liquidity protocol and the original fees for NFTs. The Bend team now maintains the NFT price oracle related to OpenSea. The BendDAO governance mechanisms would eventually be in charge of managing the procedures for choosing pricing oracle sources.

When describing “what is BendDAO” and how it functions, the cost of NFTs is a crucial factor. Regarding BendDAO’s pricing issues, you must also be aware of the collateral ratio. The collateral ratio represents the maximum amount of ETH you can borrow at the floor price of a particular NFT. The collateral percentage for illustrious NFTs, including BAYC and CryptoPunks, is 40%. The collateral ratio drops to 30% for other NFTs, though. Why? The response would point you toward the NFT risk factors that BendDAO took into account while calculating the value of NFT collateral.

BendDAO NFT Risk Parameters

The percentage of collateral changes for each NFT collection on the BendDAO cryptocurrency system for NFT liquidity. Users must also know how the Bend protocol’s risk assessment strategy emphasizes market and innovative contract concerns. The Bend protocol uses a clear risk framework to study the risks that come with NFT assets in BendDAO. Additionally, proactive risk assessment makes it easier to comprehend how to mitigate prospective dangers. NFT device owners might participate actively in the DeFi community with the aid of BendDAO. But the financial risks of NFT collateral mean that BendDAO has to choose NFT projects that can increase its liquidity.

The protocol uses the NFT risk parameters on BendDAO to determine how much the NFT collateral is worth. The five key risk factors for NFT liquidity on the BendDAO protocol are listed below.

• Many NFT sales or trade volumes.
• Asset value is also known as the asset’s average sales value.
• Numerous distinctive wallets interact with the non-fungible token in dApps from the NFT community.
• NFT-related interactions include counting dApp transactions alongside bids and other NFT-related uses. Retention rate, or the number of days within the appropriate time a wallet was active.

Also read: Why Are NFTs So Valuable?

The BendDAO Lending Protocol’s salient features

For BendDAO to work as an NFT liquidity protocol, people need to talk about things like bendETH, boundNFT, the interest rate model, and the oracle price feed.

bendETH

The Bend protocol is based on an attractive model, just like the token on AAVE. The Bend protocol’s interest-bearing ticket is called bendETH, and it can be made and destroyed when deposits and withdrawals are made. The value of a bendETH token is equal to the value of the asset that was first deposited. This means that storage, transfer, and trading are all safe.

boundNFT

The next significant aspect of the decentralized BendDAO peer-to-peer lending application is boundNFT. When borrowers deposit an NFT on the platform, a debt NFT is created. Identical token IDs and metadata as the original NFT are present in bound nuts, suggesting simplicity of usage as a social media PFP. Without giving up the digital look of NFTs, the BendDAO protocol can use boundNFT to access vault features and provide complete security. You can feel safe knowing that you can’t lose your boundNFTs because you can’t approve them or give them to someone else. The bound NFT may offer exciting services, like providing the concerned NFT access to any airdrops or assets that can be claimed or made. Additionally, boundNFT’s flash claim feature enables owners to collect NFT incentives via several protocols.

Model of Interest Rates

The interest rate model requires an understanding of the interest rate model to grasp “what is BendDAO” and its value advantages. BendDAO decides how much interest to charge on loans based on how much money is in the lending pool. It has been tuned to manage liquidity risks while also maximizing usage. The interest rate model is an excellent way to deal with liquidity issues because it uses user incentives as a source of liquidity. Due to the available capital, the BendDAO interest rate model gives lower interest rates to encourage lending. Due to a lack of money, the protocol calls for higher interest rates, meaning that loans would have to be paid back earlier and interest deposits would have to be made.

NFT Bidding

Another significant design feature of the BendDAO NFT protocol is the NFT auction. It aims to ensure that BendDAO can maintain decentralization and sustainability. Additionally, it is the most effective method for determining the actual cost of NFTs. When the health factor for a mortgaged NFT drops below 1, the NFT auction begins. The auction starts with a set starting bid that exceeds the entire accumulated debt for the NFT in question. To make it even easier, collateral with an 80% liquidation threshold means that it could pay back the loan once the value of the debt equals 80% of the value of the collateral.

The Bend Protocol’s token economy

In the introduction, there will also be a focus on how the tokenomics of the BendDAO crypto liquidity protocol work. The protocol guarantees NFT liquidity in a scalable, decentralized, liquid, and fair manner. Currently, the protocol anticipates having a 10 billion token initial supply. The distribution strategy for the BEND token distribution looks like this.

Team of developers: 21%

10% for the initial fair-launch offering

21% of the Treasury Reserve

5% for airdrops

Incentives for good governance from Uniswap LP: 3%

40% of incentives are for borrowing or lending.

Regulatory Mechanism

The name “DAO” in BendDAO denotes the need for a protocol governance mechanism. It’s interesting to note that the Snapshot Space forum serves as the governance structure for the BendDAO NFT liquidity protocol. The panel approves Bend Improvement Proposals for the protocol using BEND tokens. The governance system is interesting because it was made to make sure that ideas are discussed in depth before being put forward for adoption on the blockchain. So, people in the community could choose someone else to cast their vote on their behalf. The fact that voices can be given to Bend protocol MPs differently shows that the BEND token is essential in the governance process.

Last Words

The development of the BendDAO NFT liquidity solution is still in its infancy. But it’s important to realize that it has solved the liquidity problem without causing NFTs to fall apart. Owners of non-fungible tokens can avoid fractionalizing their holdings to benefit from desired liquidity. Users of the BendDAO protocol are put in a closed loop where they have to borrow and lend money repeatedly.

BendDAO offers quick NFT-backed loans, collateral listing, and NFT down payments. This means buyers can buy NFTs with a 60% down payment and a flash loan. Like buyers, sellers might put up NFTs as security and get loans. The main accomplishment of BendDAO’s activities is the prompt repayment of loans. With a security risk assessment method and a robust governance system, the Bend protocol can lead to good things for the future of NFT liquidity.