NFT lending protocol Bend DAO proposes emergency changes amid credit crisis

On Monday, developers of decentralized nonfungible tokens (NFTs) borrowing and lending protocol Bend DAO proposed new emergency measures in an attempt to stabilize the ecosystem. The same day, it was revealed that the project had just as little as 15 wrapped Ether (wETH) worth $23,715 to pay back lenders. Approximately 15,000 ETH was lent using the mechanism. To save the protocol from a credit crisis, the Bend Dao dev team suggested that the liquidation threshold for collateral would be constrained to 70% of the loan value, down from 85%. 
Next, the auction period for NFTs on its platform would be reduced from 48 hours to four hours. Then, the requirement for minimum bid price of NFTs on Bend DAO to be pegged to 95% of the floor price on popular digital collectibles trading platform OpenSea would be removed. Interest rates on loans are to be reset from 100% currently to 20%. Finally, the BendDAO treasury would be empowered to cover the bad debts and use revenue.
The collapsing floor prices of NFTs in the bear market, even among reputable collections, has placed many NFTs in danger of liquidation, as interest rates are driven to abnormal levels. As interest rates on "debt-secured" NFTs have skyrocketed to nearly 100%, some users may be finding i it more economical to simply let go of their digital collectibles (which are also decreasing in value) instead of paying back the debt, resulting in bad loans. Thirdly, NFT markets are not as liquid as coins or token markets, meaning there may not actually be bids during an NFT's liquidation process, further adding to a death spiral.
Bend DAO was regarded as a blue-chip NFT borrowing and lending platform before credit issues began. The vote for the current proposal will last for 24 hours and has passed the required quorum of 47 million veBend with 99.23% in favor. 
1/ A on how @BendDAO currently works, why the FUD is wrong, and the real problems with the current protocol.
Full disclosure: I pulled all my $eth yesterday and have no current exposure. This is to help others understand their position or those thinking about lending.
— TradFiWhale.eth (@TradFiWhale) August 21, 2022