Bluechip NFT Eligibility Requirements v2 have been decided by DAO voting. Details: Snapshot
From a financial perspective, the assets of BendDAO are the NFT collaterals, while the liabilities are the loaned amounts. Each NFT collection added to BendDAO as collateral increases the protocol risk of insolvency.
Both bluechip NFT eligibility requirements and delisting reference are important in measuring the performance of the NFT collection, which is also a form of risk assessment aiming to contribute to higher risk standards on BendDAO.
Since the NFT collateral used on BendDAO affects the protocol at its core, we should keep monitoring the performance of the NFT collections and even delisting some collections. When an NFT collection sees a deviation from other collections, DAO can propose to take action to limit the risk.
The chart below indicates the comparison of the regular and abnormal floor prices of 5 NFT collections during a period. In the first chart, the market’s overall trend is upward, but the collection marked in red is clearly contrary to the market trend. Chart two shows that the floor price in red fell significantly while the other 4 collections remained steadily.
These are the actions we can take to further mitigate risks.
- Freeze the collection
This will temporarily pause the collection as collateral except for existing borrowers repaying the loans and liquidators taking part in auctions. No new loans after the freeze. The floating losses might increase if we don’t pause the market.
- Adjust the Liquidation Threshold for the collection
This will trigger the auction and 48h liquidation protection earlier to enlarge the arbitrage space for bidders. The system’s floating losses will decrease if bidders will have more incentives to bid.