OpenSea Turns Into NFT Ghost-Town After Volume Drops By 99% In 90 Days

A continuing debt crisis at lending platform BendDAO is also increasing the risks of the NFT bubble going bust. OpenSea, the world’s biggest nonfungible token (NFT) marketplace, has now seen a considerable plunge in daily volumes as fears about a possible market bubble grow.

OpenSea Volume Plummets To Annual Lows

Interestingly, the marketplace processed almost $5 million worth of NFT transactions on August 28 – nearly 99% lower than its record high of $405.75 million on May 1, based on DappRadar.

The massive drops in daily volumes coincided with equally drastic plunges in OpenSea users and their transactions, indicating that the value and interest in the blockchain-based collectibles have plummeted in recent months.

That is also visible in the dropping floor prices – the minimum amount one is ready to pay for a nonfungible token (NFT) – of the leading digital collectible projects. For example, the floor price of the Bored Ape Yacht Club plunged by 53% to 72.5 ETH on August 28 compared to a high of 153.7 ETH on May 1.

Similarly, the floor price of CryptoPunks, another top NFT collection, lost around 20% from its July high of 83.72 ETH.

NFT Bubble Seems To Be Bursting

NFT prices are quoted in the native currency of the blockchain on which they get launched. Therefore, a digital collectible developed on Ethereum will be bought using Ether (ETH), which also indicates that NFT’s prices will fall in case ETH’s market valuation drops.

A bearish Ethereum market seems to be one of the key drivers behind the poor NFT statistics. Notably, the price of one ETH has plunged from $4,950 in November 2021 to below $1,500 in August 2022.

BendDAO Votes To Enhance NFT Liquidity

In the past week, BendDAO, a decentralized autonomous organization (DAO) that lets NFT owners collateralize their digital collectibles to take loans in ETH worth 30%-40% of the NFT’s floor price, voted to alter its protocol’s code to make its nonfungible token collateral more liquid.

The vote happened after a surge in Ether price boosted the value of ETH-denominated loans in dollar terms. In the meantime, on the flip side, NFT prices dropped, reducing the value of the collateral held by BendDAO.

Because of all that, BendDAO is now facing its debt crisis moment, where the borrowers cannot pay their dollar-denominated loans due to plunging ETH prices, and the lenders are finding it challenging to recover their loaned amount due to falling collateral valuations.

BendDAO’s latest vote appears to have changed its NFT liquidation threshold from 95% to 70%. Moreover, it has reduced the time given to borrowers to avoid liquidation from 48 hours to 4 hours to attract many bids for their NFT collaterals.

agreed, 2020-2021 was crazy get-rich-in-months & the DeFi-NFT-Web3 bubble is going bust now, turns out founders & VCs were scammers only in for the $$$.

But pipl said its over in 2018 too after ICOs.

The next bubble will come 100%, you just need to survive.
play the long game. https://t.co/5f17JfdFfY

— doncrypto (@DonCryptoDraper) August 29, 2022

In other words, the floor price of nonfungible tokens, including BAYC, risks dropping further in case the market’s liquidity continues drying up.