Floor Price of Bored Ape NFTs Hit 8-Month Amid Chances of Major Liquidations on BenDAO

22. Aug 2022 Posted by Akolkar B on News

Amid the crypto market crash this year, non-fungible tokens have also come under major selling pressure. The floor price of the very popular Bored Ape Yacht Club (BACY) NFT collection has dropped to its lowest since the beginning of 2022.

In the world of NFTs, a floor price represents the lowest price a buyer needs to pay to buy any NFT from a collection. Currently, the floor price of BAYC has dropped to 65.68 ETH. It has been on a sharp downtrend since May 1 2022. In less than three months, the floor price of BAYC NFTs has dropped by more than 50% from the all-time high of 153.7 ETH.

One of the major reasons that the Bored Ape NFTs’ floor price has come under stress is many of the Bored Apes can face liquidation on peer-to-peer lending service BenDAO. The Bored Ape NFT prices.

The BenDAO platform allows customers to borrow ETH in exchange of their NFTs. The platform allows users to take out loans up to 40% of the NFT's floor price. In case of the NFT price dropping to a point wherein the the NFT-backed loan’s “health factor” drops below 1, BenDAO will place this NFT in a 48-hour auction and sell it to the highest bidder in case the loan remains unpaid.

The health factor is basically a “numeric representation of the safety of your deposited NFT against the borrowed ETH and its underlying value”. Currently, there are more than 72 Bored Ape Yacht Club (BAYC) NFTs that are in the “danger zone”. This zone particularly represent a health factor of below 1.2 wherein the risk of drop in the floor price can trigger major liquidations.

The popular Bored Ape Yacht Club (BAYC) NFTs operate on the Ethereum blockchain network. They are sold against ETH thus shadowing the price of Ether.

During May 2022, the collapse of the Terra ecosystem led to a major crash in the crypto market. During the second quarter of 2022, the ETH price dropped by more than 43%. Thus, the floor price of BAYC also correspondingly dropped by 36%, from 116 ETH to 65.5 ETH during the same period. However, during Ethereum’s recent price rally, NFTs failed to catch up the momentum. The liquidity of most NFT collections has been heading to the south.

The BAYC NFT collection has been facing tough competition from CryptoPunks. On Sunday, August 21, the floor price of CryptoPunks flipped that of BAYC’s for a very brief period.