OpenSea daily volume plummets 99%, turning into an NFT ghost-town

Daily trading volumes on OpenSea, the world’s largest non-fungible token (NFT) marketplace, have plummeted as concerns about a potential market bubble have increased.

Lending platform BendDAO’s ongoing debt crisis also increases the risk of the NFT bubble bursting.

OpenSea daily volume plunges 99% to yearly low

Notably, according to DappRadar, OpenSea processed nearly $5 million worth of NFT transactions on Aug. 28 – about 99% below its record high of $405.75 million on May 1.

Meanwhile, on a monthly timeframe, OpenSea’s volume has dropped 90% from its January 2022’s peak of approximately $4.85 billion. In Ether (ETH) terms, the monthly drop in the same period is around 82%, according to Dune.

The massive declines in daily and monthly volumes coincided with equally drastic drops in OpenSea users and their transactions. This suggests that the value and interest in blockchain-based collectibles have diminished in recent months.

That is further visible in the falling floor prices — the minimum amount one is ready to pay for an NFT — of leading digital collectible projects.

For instance, the floor price of Bored Ape Yacht Club dropped by 53% to 72.5 E on Aug. 28 vs. a high of 153.7 ETH on May 1.

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

Poor statistics show NFT bubble is bursting

NFT prices are quoted in the native currency of the blockchain on which they are launched. So, a digital collectible created on Ethereum is purchased using Ether, 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 1 ETH has fallen from $4,950 in November 2021 to below $1,500 in August 2022.

BendDAO takes vote to make NFTs more liquid

Last week, BendDAO, a decentralized autonomous organization that enables NFT owners to collateralize their digital collectibles to take loans (in ETH) worth 30% to 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’s 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, while lenders are finding it difficult to recover their loaned amounts due to falling collateral valuations.

BendDAO’s latest vote has changed its NFT liquidation threshold from 95% to 70%. It also reduced the time offered to borrowers to avoid liquidation from 48 hours to one hour to attract more bids on their NFT collateral.

In other words, if market liquidity continues to dry up, the floor price of NFTs, including BAYC, could fall further.

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