Comprehensive interpretation of "NFT Bank" BendDAO: How to get 2 airdrops with 1 BAYC?

Written by: 0xLaughing, Rhythm BlockBeats

Written by: 0xLaughing, Rhythm BlockBeats

In April, the NFT market was hot and restless. First, the NFT PASS track led by Moonbirds became famous for its remarkable wealth effect, and then there was an event in which the NFT project Akutar worth 34 million U.S. dollars in ETH was permanently locked due to a contract loophole It has become a hot topic in various communities. At the same time, the sale of Otherside will be ushered in at the end of this month. As one of the important components of the "Ape Universe" built by Yuga Labs, Otherside will be paid with ApeCoin, and will be airdropped to holders of BYAC and MAYC.

For a long time, BAYC has discouraged most investors because of its high price. If you empty your wallet and buy a BAYC, it will greatly limit your liquidity and affect your investment efficiency. But a blue-chip NFT should be valuable. As an encrypted asset, it should be used as collateral for loans like a house or a car. In order to solve this demand, a brand new economic model has emerged: NFT lending that combines DeFi and NFT.

Simply use an example to explain how to receive 2 Otherside airdrops with 1 BAYC, and also explain the basic principles of NFT lending:

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1 BAYC received 2 Otherside airdrops

(For the convenience of calculation and demonstration in the example, assume that the floor price of BAYC is 100 ETH, the floor price of MAYC is 40 ETH, the lending platform adopts over-collateralization, and the maximum loan ratio is 40% of the floor price (assuming that the floor price remains unchanged, in fact, there may be fluctuations ). Assume that the Otherland airdrop adopts the same claim method as ApeCoin, instead of snapshots or airdrops directly to the holder’s wallet)

1. Mortgage a BAYC in your hand and lend 40 ETH

2. Buy a MAYC with the loaned 40ETH

3. On the day of airdrop collection, first use MAYC to claim the airdrop

4. After receiving the airdrop, sell MAYC at the floor price and get back 40 ETH

5. Return 40 ETH (+partial interest) to the lending platform and get back the BAYC you pledged

6. Use this BAYC to receive another airdrop, and finally get 2 airdrops

In it, we can see the key role played by NFT lending: for the lender, it provides liquidity for the lender, which improves the utilization rate of funds; for the borrower, interest can be obtained as a reward for providing liquidity.

BendDAO quickly "occupied" the NFT lending track, and its success can be said to have "the right time, place and people".

first level title

BendDAO is the first NFT liquidity protocol based on a decentralized point-to-pool, and is mainly composed of the following subdivisions.

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BendDAO's mortgage lending business

Mortgage lending is the core business of BendDAO. Through BendDAO, lenders can provide ETH liquidity to the lending pool to earn interest, and borrowers can use NFT as collateral to immediately borrow ETH in the lending pool. Currently, BendDAO uses BEND Token subsidies to achieve negative interest rate borrowing.

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Oracle price feed

When users mortgage their NFTs on BendDAO for loans, BendDAO uses the NFT floor price from OpenSea as the price feed data for NFT collateral prices, so how to ensure the accuracy of the floor price is very important.

BendDAO mainly adopts the following methods to ensure the accuracy of prices:

2. Calculate the time-weighted average price (Time Weighted Average Price, TWAP) of the floor price to avoid the impact of short-term sharp fluctuations in NFT prices on the OpenSea market.

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Diagram of the design and operation mechanism of the oracle

The design and operation mechanism of the oracle:

1. The off-chain node of the oracle machine obtains the original floor price data of NFT from the OpenSea trading market

2. Filter the original floor price data, such as unreasonable deviation from the recent average price

3. Use the time-weighted average price algorithm (TWAP) to calculate the floor price to ensure that the price is reasonable

4. Compare the difference between the price on the chain and the latest floor price to determine whether the floor price needs to be uploaded to the chain

5. Call the oracle contract interface to upload the floor price to the contract on the chainBendDAO claims that for security and reliability, multiple oracle nodes will be run to ensure valid price data is always uploaded to the on-chain oracle contract in a timely manner. It is reported that,To realize the price feed of the oracle.

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liquidation redemption auctionThe Bend protocol uses "Health Factor" to evaluate the current lending situation,The "health factor" is a numerical representation of the security of the staked NFT against the loaned ETH and its underlying value

, the higher the value, the safer the fund status and can resist liquidation risks. Its calculation formula is:

When the floor price of mortgaged NFT assets falls, causing the "health factor" of the corresponding loan to be lower than 1, anyone can trigger the liquidation of the NFT auction, and the 48-hour forced liquidation protection and the auction of NFT collateral will start at the same time.

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Liquidation, Redemption, Auction Process

The whole process is explained with a concrete example:

2.1. Assuming BAYC floor price = 100 ETH, the borrower mortgages BAYC and lends 40 ETH at a mortgage ratio of 40%liquidation threshold

90%, when the floor price of BAYC drops to 44 ETH, health factor = (44 90%)/(40+interest), since the health factor is less than 1, it will trigger 48-hour liquidation protection and start the auction process

4. If the borrower fails to repay the loan in time, the bidder with the highest bid in the liquidation auction will be responsible for repaying the corresponding related debt and get this BAYC in return

NFT hosting

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Liquidity mining

Liquidity mining

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Both borrowers and lenders of BendDAO are subsidized by BEND TokenLenders receive liquidity mining rewards by providing liquidity for the Bend protocol.aTokenAfter staking ETH, you will get bendETH linked to the value of the corresponding deposited assets at a ratio of 1:1. It adopts the same interest rate model as AAVE. bendETH and AAVE

The core values ​​are the same.Borrowers can get mortgage rewards after mortgaging their NFT for borrowing

, this is because the current Bend protocol provides BEND Token subsidies to motivate users to stake.，BEND TokenThe pledgers (veBEND holders) can get all the income of the Bend agreement according to the corresponding ratio。

BEND's Token Economic Model

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BEND and veBEND

BEND is the governance token of BendDAO, with an initial total supply of 10 billion (10,000,000,000). BEND holders can pledge BEND to obtain veBEND. Currently, veBEND has two uses:vote:

BEND pledgers (veBEND holders) can participate in voting to choose which NFT to use as collateral for the Bend protocol to support borrowing ETH and providing liquidity. As long as the backing NFT liquidity improves, all NFT holders will benefit.veBEND holders can obtain 100% of the income of the Bend agreement according to the corresponding ratio.

BEND Token allocation and release

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BEND Token distribution consists of six parts:

development team

development team

IFO

1,000,000,21% of the BEND Token is allocated to the Bend development team, locked in the first year, and 7% will be released linearly in seconds for each of the next 3 years. Therefore, in the first year, the Tokens allocated to the Bend development team will not be sold to the market, but can only participate in the distribution of protocol revenue.000 (10%) of BEND Token will be sold in the form of IFO (Initial Fair-launch Offering), which ensures that Token will be distributed in the fairest possible way. 1 ETH can buy 333,333 BEND, and a total of 3,000 ETH has been raised. CurrentlyIFO completed ahead of schedule

. Each participant can choose the lock-up period during the IFO, from 0 weeks to 4 years. 66% of the raised ETH will be used for the ETH lending pool on Bend, and 34% of the ETH will be used for the development of the Bend protocol.

21% of BEND Token is locked as a treasury reserve. It is used to build an ecosystem and can be used to deal with emergency financial security. The use of these Tokens can only be determined through community voting.

airdrop

According to BendDAO'sAirdrop RulesAirdrop Rules

, 5% of Bends Token were distributed as airdrops to some OpenSea users, blue-chip NFT holders, borrowers and lenders who have used NFTfi, and 500 lucky OGs in Discord.

Uniswap LP IncentivesTo encourage market makers to provide liquidity on Uniswap, 3% of BEND Token will be allocated through liquidity incentives. Uniswap LP incentives will be determined through DAO governance, currentlyThe incentive plan has been voted

, liquidity mining can be performed on BEND/ETH Uniswap v2 LP.

In order to encourage lenders and borrowers to provide liquidity for the lending pool, 40% of the BEND Token will be allocated through lending incentives and released linearly within 5 years at a lending ratio of 1:3.

Features and advantages of BendDAO

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The "point-to-pool" model realizes instant loan repayment

Unlike NFTfi's Peer-to-Peer NFT loan agreement, the Bend protocol adopts a peer-to-pool (Peer-to-Pool) method.

When users borrow through BendDAO, they use a certain percentage of the floor price (up to 40%) as the collateral ratio. The liquidity pool provided by the lender ensures that sufficient liquidity can be provided for the borrower. Users can realize instant borrowing, repayment payment. There is no need for trust agency audits, and loan repayments can be completed instantly through smart contracts, which can greatly release the liquidity of the NFT market.

Peer-to-peer lending requires both borrowers and lenders to reach a consensus on NFT value, mortgage ratio, interest, etc. This model may take a long time for both borrowers and lenders to reach a consensus on these aspects each time they use it to borrow money, so its matching efficiency is quite Compared with the point-to-pool mode, it is relatively low.

"Multi-pronged approach" to avoid users from unnecessary losses due to market fluctuations

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Health Factor Risk LevelBendDAO calculates"Health Factor"

To evaluate the current lending situation, divide it into multiple health factor levels so that users have corresponding expectations for market fluctuations in advance.It allows the borrower to avoid liquidation of the mortgaged NFT assets immediately when the liquidation auction is triggered by violent market price fluctuations. As long as the loan can be repaid within the 48-hour liquidation protection period, it will not be liquidated.

OracleBy calculating the time-weighted average price (Time Weighted Average Price, TWAP) of the floor price, it is also possible to avoid the impact of short-term sharp fluctuations in NFT prices on the OpenSea market.

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true ownership

However, BendDAO realizes "true ownership" through boundNFT. Users mortgage NFT for loans. If there is an airdrop reward matching the mortgaged NFT, the user can still get the airdrop reward. boundNFT is anchored to the mortgaged NFT at a ratio of 1:1. The boundNFT held by users can be easily integrated into NFT wallets and social media accounts. For example, even if the NFT in hand is mortgaged in the Bend protocol, it can still be used as Twitter Blue's authentication profile picture.

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Flash Claim makes it easier to receive airdropsFlash ClaimIt is more convenient and faster to receive the corresponding airdrop without releasing the pledge. This can also release market liquidity. For example, the previous airdrop of ApeCoin enabled holders of NFT projects such as BAYC and MAYC to obtain new funds, which made the market more dynamic.

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1,000,000,000 (10%) of BEND Token is distributed fairly through IFO, without VC financing. BendDAO completes the supply of liquidity in the agreement lending pool through IFO, and users can obtain fair Token distribution.

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Increased liquidity in the NFT market

As the infrastructure of the NFT market, NFT lending has always been in great demand. Originally, NFT users faced a dilemma: hold NFT, but the liquidity of funds will be greatly limited, especially for high-priced blue-chip NFTs; selling NFTs to obtain liquidity may miss the future growth of blue-chip NFTs and be "dumped" car".

The NFT lending agreements before BendDAO did not have a good solution, and their matching efficiency was low and they could not be widely used. It is reported that the BendDAO team started development in September last year, and the mainnet was officially launched in March this year, which took half a year. Aiming at the pain point of low borrowing efficiency in the NFT market, as the first NFT liquidity protocol based on a decentralized point-to-pool, BendDAO has a first-mover advantage and head effect.

High scalability

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In addition to the NFT lending business, BendDAO also seems to want to get a share of OpenSea.official websiteofficial website

There are various needs in the NFT market. BendDAO does not seem to want to be limited to NFT lending business. Its high scalability and unlimited imagination for the future make it look more like an "NFT bank".

Potential problems with BendDAO

Peer-to-pool lending causes rare NFTs to be undervalued

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Even BAYC with rare attributes can only borrow at the floor price in BendDAO

However, there is currently no oracle model in the NFT market that can value non-floor price NFTs. It is understandable that BendDAO adopts a relatively conservative loan ratio. Maintaining a margin of safety and efficient and sustainable operation is the current optimal solution, but The NFT market is looking forward to an oracle solution that has wider applicability and maximizes the utilization of funds.

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Selling pressure of "mining coins" and "vampire attack"At present, BEND Token is mainly produced in the form of liquid mining as a subsidy for both lenders and borrowers. The high APY subsidy may attract a large number of "liquid locusts" to mine in the short term. Selling" may form a large selling pressure that will affect the price of the currency, which will lead to a decrease in APY and enter a "death spiral". Although the ve model is adopted, the veBEND obtained after staking BEND only has the functions of voting and sharing protocol revenue. That is to say

BendDAO, as the first NFT liquidity protocol based on a decentralized point-to-pool, can currently take advantage of its first-mover advantage to enjoy the early dividends of the NFT lending market. Attracting users to pledge with a higher APY (similar to the Token rewards that attracted a large amount of Uniswap liquidity when Sushi was first launched), may further increase the selling pressure of BEND Token, causing the currency price to fall. It remains to be seen whether BendDAO can maintain its core competitiveness and secure the top spot in the NFT lending track.

related risks

CertiK's audit of BendDAO

according toaccording to, there are some problems, such as auctions may fail due to price fluctuations, centralization-related risks, etc.

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BendDAO founder @CodeInCoffee responds to rug pool related remarksAt the same time, there are, BendDAO's receiving airdrops and transactions are safe, but its contract uses an upgradeable proxy contract to make it look like a "trap". BendDAO’s reply is that the use of an upgradeable proxy contract for the contract to receive the airdrop is to ensure the safety of funds, and at the same timeofficial documentofficial document

In addition, 66% of the 3,000 ETH raised in the IFO provided liquidity for the lending pool, and another 34% was used for "Bend Protocol Development", which looks like the team retained more than 1,000 ETH in this way. ETH, and the Token distribution announced by the team are somewhat different from the "21% BEND Token distribution locked for one year". In addition, the constant anonymity of the BendDAO team is also one of the potential risks.

first level title

In the past week, BendDAO, which combines DeFi and NFT, can be said to be a star project in the encryption circle. Some people have just heard about it, saying that it is like an outbreak of "demolition households"; others have learned about it a long time ago, and good things take time, and excellent projects need time to settle.

In fact,In fact,

Its success has the "right time, place and people":Time:

At the end of the month, Otherside developed by Yuga Labs is about to usher in the sale and airdrop. The NFT market needs a lot of liquidity. The emergence of BendDAO allows users to pledge their blue-chip NFTs to obtain funds to participate in the sale of Otherside.Location:

The NFT lending market lacks good solutions, and BendDAO has no strong competitors. With its first-mover advantage and multiple innovative lending mechanisms, it quickly gained a large number of users.Renhe:There are giant whales divided into twoA total of 2290 ETH in total

The IFO was almost "booked out", which made the IFO end early and the price of BEND Token skyrocketed. In less than 24 hours, the price of BEND skyrocketed from a minimum of 0.00786 to a maximum of 0.13812, an increase of 1,757%. The wealth effect is the best advertisement, and BendDAO became a hot topic in various communities for a while.At present, the total market value of the NFT market hasOver $18 billion

, the NFT lending agreement has broad prospects as the infrastructure of the NFT market. With its multiple innovative lending mechanisms, BendDAO uses its first-mover advantage and head effect to try to secure the top spot in the NFT lending track. It may have some problems, but it's not bad. To a certain extent, it solves the problem of low lending efficiency in the current NFT market, releases the liquidity of blue-chip projects, injects more liquidity into the market, stimulates the vitality of the market, and opens up more ways to play .on the InternetSearch "NFT loan"

, we can see that this track is changing with each passing day, and new NFT lending projects and related financing information emerge in an endless stream. They can not only help the NFT market to further expand, but also act as competitors to restrain each other and seize market share. But NFT lending is only part of the NFT market demand, and NFT players are also looking forward to a full-featured "NFT bank" that can develop new ways of playing like "down payment", "installment purchase", and "credit loan" like real estate.