Higher leverages signal optimism, that's why Compound Finance's explosive growth in 2020 heralded the beginning of Defi summer. I believe NFT lending protocols will take this mantle in the next bull run, and I pick @BendDAO to be my bull. Here's my analysis:

This thread is consisting of three sections The fundamentals - Bend and its features - The tokenomics - Interest model - Oracle - liquidation model - Risk framework The story so far - Bend's current situation - Social media interaction - Roadmap My thoughts Let's dive in🧵

So what is Bend? Bend is a P2P NFT lending protocol. What makes it stand out?

For lenders: • Never go bankrupt: Liquidated NFT goes into auction immediately → starting bid is always higher than the loan amount → lenders are paid back.

For borrowers: • 48hr liquidation protection: repay within 48hr of liquidation → NFT returned to the borrower. • Claim your airdrops: Bend collects and distributes NFT for borrowers → No need to withdraw your NFT.

• Never get stolen: boundNFT for collateral → Non-transferable, non-approvable, can still show off on social media

The tokenomics: Distribution - • Team: 21%, 1-year cliff, 3 years unlock • Initial Fair Offering: 10% (1ETH = 333,333 $BEND) • Treasury: 21% (vote to spend) • Airdrop: 5% • Uniswap LP: 3% • Lend/Borrow incentives: 40% (1:3 ratio)

The conclusion? - Only 15% in circulation at the start → IFO, Airdrop - 64% in project development → incentives, LP, treasury - Heavily incentivizing borrowing → larger market share - 1 + 3-year team unlock → team in it for the long term

Interest Model: Utilization rate too low → not enough protocol income Utilization rate too high → insolvency risk To balance between utilization rate & interest rate, Bend designed a special interest model, designating the sweet spot at a 65% utilization rate

Price oracle: In a lending protocol, an accurate oracle is crucial, here's how Bend does it: 1. Obtain floor price from OS & LR 2. Filter if the deviation is too high 3. Compare on-chain floor and current floor 4. Use on-chain contract to calculate TWAP 5. Final price

Liquidation model: Once LTV > 90% (Health < 1), any user can trigger the liquidation process by starting an auction on the collateralized NFT. However, when an auction starts, the borrower still has 48 hours to pay back the loan and get their NFT back. (48hr loan protection)

At the same time, users can place bids on the NFT. Starting price must: 1. > 95% of the floor price 2. > the accumulated debt Bidder also 1. Must deposit ETH to bid 2. May withdraw ETH when they're not the highest bidder

When an auction ends: • Highest bidder pay and get the NFT • If winning bid > loan amount, the borrower receives the excess • Lenders recover their ETH Minimized damage and maximized reward for all parties involved

Risk Framework: To be eligible for collateralization, a new NFT collection must: 1. Floor price > 10 ETH 2. Market cap > floor price * 10,000 3. Items > 5,000 4. Owners > 1,000 5. Accumulated trading volume on OS > 50k ETH 6. Deployed for more than 30 days

Audits: Bend's main contracts were audited by @CertiK on 04/01/2022 Recently audited again by @verilog_audit after contract updates on 05/26/2022

The story so far Currently, Bend accepts: • MAYC • BAYC • Cryptopunk • Doodles • CloneX • Azuki • Space Doodles

As for reserve assets, Bend only accepts ETH for now, but might be open to other assets (SOL maybe?) in the future as their ecosystems become more robust.

Now that we're done with the fundamentals, let's look at how Bend is doing right now. Some stats: As of 5/28, Bend has 84.2k in TVL, of which: • 43k ETH from lenders • 41.2k ETH in collateral value • 20.3k ETH currently borrowed (47% utilization rate)

Of the 41.2k ETH collateral value, BAYC: 66%, 3% of supply MAYC: 16%, 2% of supply CloneX: 5.9%, 1% of supply CP: 5%, 0.47% of supply Azuki: 3.7%, 1.55% of supply Doodle: 2.4%, 0.84% of supply Space Doodle: 0.2%, 0.14% of supply https://dune.com/cgq0123/Bend-DAO Credits: @cgq0123

On the user side, the 1182 NFTs used as collaterals come from 781 unique borrowers → 66% of the borrowers have only deposited 1 NFT

The number of NFTs used as collateral + The number of users who have only deposited 1 NFT on Bend = Most holders of eligible NFT collections are not yet using Bend's product. ↓ Bend still has a lot of untapped growth.

Governance: Holders that have their $BEND locked receive VeBend which can be used in community governance. Current VeBend supply: 173M Average voter turnout: 15% (bouncing between 10 ~ 25%)

Social media interactions Twitter: Twitter follower count: 20k Average interactions: ~20 (0.1%)

Discord: Member count: 10k Daily online: ~1k Daily active (discussions, not just gm): <100 - Most discussions are in the Chinese channel Not the most active community, but there are a few dedicated members who come online and have discussions about the project every day.

Some highlights in the roadmap for the rest of 2022: • Theft-proof, bluechip-only NFT trading platform • P2P lending (Different from the current pooled lending) • More bluechip NFT for collateralization No details yet: • Universal Web3 Data Liquidity • Permissionless Pool

My thoughts: I'm bullish on the entire NFT lending market, and especially @BendDAO, for 2 reasons: 1. NFT holders NEED liquidity Holding an illiquid asset makes you lose out on opportunities, this is an especially acute pain point for NFT hodlers.

2. No one wants to withdraw their NFT every time there's an airdrop Airdrop is the simplest way to add value to a collection. However, no one wants to withdraw their NFT every time there's an airdrop. It interrupts other ongoing investments. @BendDAO is here to solve that.

Takeaway: • Bend provides much-needed liquidity for bluechip NFT holders • Airdrops can be claimed even when NFT is deposited as collateral • Based on the metrics, Bend has an enormous room for growth • 1 + 3 years token lock, dev team in it for the long term