The proposed solution of lowering the liquidation threshold is absolutely the right move but will still take some time to implement. Here is a suggestion on a change that could happen immediately.
Right now all excess Eth form an auction goes to the original NFT holder. They have essentially defaulted on the loan so I propose the following.
80 percent still goes to the original NFT holder
10 percent goes to the firsy bidder - right now the first bidder is only rewarded if the loan I’d paid back, but that first bid is critical it guarantees no lose to the LPs so this should immediately help getting that first bid
10 percent to buy and burn BEND tokens, thus should help with token price by providing constant buy pressure while reducing supply