OpenSea, the world’s largest nonfungible token (NFT) marketplace, has witnessed a substantial drop in its daily trading volumes. Data from DappRadar revealed that the marketplace processed nearly $5 million worth of NFT transactions on August 28, approximately 99% lower than its record high of $405.75 million on the 1st of May.
The massive decline in daily volumes comes at a time when there is a drastic drop in OpenSea’s users and their transactions, suggesting that the value and interest in the blockchain-based collectibles have diminished in recent months.
That is further visible in the falling floor prices, which is the minimum amount one is ready to pay for an NFT, of leading digital collectible projects. As an example, the floor price of the Bored Ape Yacht Club (BAYC) dropped by 53% to 72.5 ETH on August 28 versus a high of 153.7 ETH on May 1.
OpenSea Trading Volume Plunges By 99% In 90 Days
NFT prices are quoted in the native currency of the blockchain on which they are launched. So, a digital collectible created on Ethereum will be purchased using Ether (ETH), which also means that NFT prices will fall if ETH’s market valuation plummets.
A bearish ETH market appears to be one of the primary drivers behind the poor NFT statistics. Notably, the price of one Ether has fallen from $4,950 in November 2021 to below $1,500 in August 2022, a 69.69% drop.
BendDAO, a decentralized autonomous organization that enables NFT owners to collateralize their digital collectibles to take loans (in ETH) worth 30%-40% of the NFT’s floor price, voted to change its protocol’s code to make its NFT collateral more liquid.
The vote occurred after a rise in Ether price increased the value of ETH-denominated loans in dollar terms.
Meanwhile, on the other hand, NFT prices plummeted, reducing the value of the collateral held by BendDAO.
As a result, BendDAO is now facing its own debt crisis moment, where borrowers cannot pay their dollar-denominated loans due to falling ETH prices, and lenders are finding it difficult to recover their loaned amount due to falling collateral valuations.
BendDAO’s latest vote has changed its NFT liquidation threshold from 95% to 70%. It has also reduced the time offered to borrowers to avoid liquidation from 48 hours to 4 hours to attract more bids for their NFT collaterals.
In other words, the floor price of NFTs, including BAYC, risks plunging further if the market’s liquidity continues to dry up.