The top NFT collection named Bored Ape Yacht Club (BAYC) has witnessed an extreme decline in its Ethereum floor price since the beginning of this year, during a consistent market drop and broader crash of the crypto market. The floor price of these non-fungible tokens is currently standing at 65.68 ETH, as per CoinGecko. The respective fall has been witnessed after the NFT collection reached 153.7 ETH at its all-time on 1st May.
BAYC’s Ethereum Floor Price Dips Below 8-Month Low
The position of BAYC is even now the largest collection of NFTs in terms of the market capitalization with 656,800 ETH slightly higher than its closest opponent CryptoPunks that have a total market capitalization of nearly 655,000 ETH while 65.5 ETH is its floor price. Nonetheless, the holders of Bored Ape are not fully unlucky as the fluctuating price of Ethereum (ETH) denotes that the floor price of BAYC is approximately $107,000 at the moment.
This is considerably lower as compared with the beginning of 2022 when the figure of $256,000 was above it, however, it was higher than a low of nearly below $87,000 as witnessed in June. Apart from that, the platform permitted the utilization of loans on BenDAO – a peer-to-peer lending facility – that poses a risk of liquidation, because of the dropping floor price of the NFT collection.
BenDAO, with which the consumers are enabled by the clients to get ETH borrowed in return for the non-fungible token, lets the customers request loans of nearly 40% of the entirety of the floor price of a non-fungible token. If the NFT’s floor falls to a level where the health factor of an NFT-backed credit is lower than 1, the respective NFT is positioned in an auction and traded to the top bidder if the debtor has not paid the loan.
The health factor counts as a numeric demonstration of the security of a person’s deposited non-fungible token in return for the borrowed ETH as well as its original value. At the moment, there are seventy-two Bored Ape Yacht Club non-fungible tokens on the venue that are in the danger zone, as mentioned by Cirrus an NFT trader. The person spread the news of likely liquidations, with a health factor lower than 1.2, the point where the NFTs may plunge in terms of their price, paving the way for liquidation.
BAYC Fears Undergoing Liquidations in the Case of BenDAO
BenDAO noted that the NFTs go through temporary fluctuations normally in the case of their floor price. It added that bluechip NFTs’ consensus was not established in one day, and there is no chance for it to crash in a small time. The documentation thereof additionally points out that just short-term floating losses have been witnessed by the venue rather than any actual losses. On the other hand, did not provide any answers to the questions concerning the implications of the purchasers’ entry or the NFT’s decline to a level that is lower than the interest-bearing debt.
