Are We going to witness the collapse of the NFT marketplace?

As is common knowledge, the cryptocurrency and NFT market is unstable, as demonstrated by the price crashes of Terra and Terra Luna. The price of the promising cryptocurrency for purchasers may soar, which only encouraged businesses to attract more clients to the cryptocurrency market.

A significant liquidation of the NFT market may be imminent. Numerous NFT holders are being drawn to the web3 lending protocol BendDAO in order to use their non-fungible assets as collateral for ETH loans. When a BAYC whale borrowed more than 10,000 ETH from the site, fears of liquidation increased.

One of the main evolving cryptocurrency trends of 2022 is web 3.0, which is more intelligent, connected, and open. It will be a blockchain-based replacement for the internet that will give users back ownership over their data, eliminate the risk of a site meltdown brought on by a single point of failure, and let website owners stop depending on the firms who operate the servers.

NFT is an art form in and of itself, therefore creating a high-quality, well-priced NFT product integrating blockchain technology, art, and the use of AI-advanced computer technology is even more difficult. The low-quality ones will eventually be filtered out by OpenSea, Rarity, and many other NFT marketplaces, preventing them from being sold or purchased. Some people might eventually grow disinterested in this topic and withdraw from this historical period, especially if they don’t consistently learn and advance their talents in various areas. After a hype cycle, it is a natural selection that could affect nearly anything on this planet.

The decline of NFT Platforms

Although the value of NFT platforms is declining, the market is not in risk of imploding as a result. Overall, the market is performing well; but, it is not as high as it once was. In spite of continuing to perform well overall, the value of Non-Fungible Tokens has fallen to zero. NFT platforms are seeing a decline in valuation, similar to many other digital companies. But don’t panic, the market is still performing well overall despite the reduced pricing. Simply said, it’s not as high as it formerly was.NFTs are developing technology, therefore their costs are erratic. The pricing alterations take into account both product advancements and the numerous other elements that influence consumer opinion.

Non-fungible tokens are priced according to market activity. The floor prices of all collections will decrease as the overall volume declines. The likelihood that the floor prices will be close to the loan amount increases. As the floor prices decline, increasing the likelihood of liquidation. A concept known as the “health factor” is used by BendDAO to determine the likelihood of liquidation. It stands for the security of a user’s deposited NFT against the value of the borrowed ETH. The platform auctions off the deposited assets when the health factor hits 1. There are 45 BAYC on the marketplace right now with health factors under 1.2.

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