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 fine to the first bidder.
  • The fine will take the larger of 5% debt or 0.2 ETH. Fine = maximum (5% of the debt, 0.2 ETH)

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 first bidder will receive at least 0.2 ETH paid by the borrower as the penalty if the borrower repays within 48 hours.
  • The highest bidder will get the collateral if the borrower doesn't repay the loan.
  • The bidder needs to deposit ETH to bid.
  • The deposited ETH will automatically be refunded 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 fine of a maximum(5% of the debt, 0.2 ETH) to the first bidder.
  • If the collateral is sold in auction for greater than the loan amount, the excess will belong to the borrower.