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Auction

The NFT auction design ensures Bend remains both decentralized and sustainable. It is likely the best method to find the real price of NFT assets.

The Design of NFT Auction

An NFT auction will be initiated when the health factor is below 1. More specifically, if the collateral has a liquidation threshold of 90%, the loan will be liquidated when the debt value is worth 90% of the collateral value. The liquidation threshold is specified per collateral and expressed in percentage points.

  • An open-outcry ascending dynamic auction system
  • The system opens the auction with a starting price. The starting price will be 1) more than 95% of the floor price; and 2) bigger than the total accumulated debt.
  • If the borrowers repay the loan in 48 hours, he/she will pay a penalty fine (1% bid price) to the latest bidder.

Bidder

  • Anyone can take part in an auction.
  • The bid must be 1) no less than the starting price; and 2) higher than the previous bid.
  • The bidder needs to deposit ETH to bid.
  • The bidder can withdraw the deposited ETH when his/her bid is not the highest bid.

Borrower

  • The borrower will have a 48-hour liquidation protection period to repay the loan.
  • If the borrower repays within 48 hours, he/she will pay a penalty fine (1% bid price) to the latest bidder.
  • If the collateral is sold in auction for greater than the loan amount, the excess will belong to the borrower.

{% hint style="info" %} Liquidation FAQ {% endhint %}