Are The Apes Over-Leveraged?

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Bored Apes have been involved in more new BendDAO loans than ever before, according to data published by NFTstatistics.

The week ending Dec. 27 saw 351 BAYC NFTs in new BendDAO loans, with 301 new loans for the week following including a record high of 81 loans on Jan 3.

Additionally, overall NFT borrow volume in December reached the highest levels since April in USD terms.

Why It Matters: Leverage was a big driver of the crypto market fallout, and to date, NFTs have been somewhat spared as NFT financialization options have lagged behind crypto. But with increased volume on BendDAO, on top of other NFT lending platforms like NFTfi and X2Y2, NFT holders have more options than ever to trade on leverage.

There is also a strong chance that the increased market liquidity over the past month, driving this current mini-bull run, is built at least partially on leverage.

Key Figure: Nearly 60,000 ETH ($75,000,000) of BAYC collateral is tied up in loans across just BendDAO and NFTfi as of Jan. 4, as reported by WarDaddyCapital.

Should You Be Worried? Well, yes and no. Regarding BAYC specifically, each time over the past few months that there has been widespread FUD around BendDAO liquidations, the floor has fallen briefly then bounced back fairly quickly.

But the overall increasing volume in NFT borrowing is a trend to watch closely. December saw the highest volume of loans since The Otherside mint in April (and imminent NFT market crash) in USD terms. And while the total USD amount was substantially larger in April, ETH was more than 2x as expensive, meaning in ETH terms we are not that are off from ATH.

If whatever upcoming event these lendees are loading up leveraged ETH for turns out to be disappointing (i.e. The Trial of Jimmy the Monkey mint), we could see liquidations and broader market impacts (i.e. floors falling and reduced liquidity).

We will find out the answer to this question soon, one way or another.

Update: NFTstatistics has provided some additional commentary on the new BendDAO loans, indicating there may be a fair amount of refinancing in the numbers.

Have a comment on this evolving story? Reach out to me @tyler_did_it on Twitter.

Author Bio

Tyler Warner

Tyler is a high-volume NFT trader, having reached the top 100 in NFT sales revenue using NFTBank’s rankings, a Pengu maxi (in Luca we trust), and a writer for Lucky Trader. Tyler’s writing spans market analysis, news breakdowns, project ecosystem overviews, and web3 opinion pieces.

Disclaimer: The author or members of the Lucky Trader staff may own NFTs discussed in this post. Furthermore, the information contained on this website or the Lucky Trader mobile application is not intended as, and shall not be understood or construed as financial advice. AI may have assisted in the creation of this content.