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Worst NFT Liquidations: Debtor Lost $195K by Defaulting

4.1
| by
Lim Yu Qian
-

Is it Safe to Borrow Against NFTs?

Borrowing against NFTs comes with risks, including being liquidated: In the 25 worst NFT liquidations so far, debtors have lost $26,756 to $194,861 each. The losses were a result of failing to repay their loans on time, even when their NFT collateral was worth more than the debt they owed.

The liquidation losses experienced by debtors were worth between 15.3% to 91.3% of their NFT collateral value, or 46.1% on average. This means that debtors (or borrowers) could have received more crypto from selling their NFTs, instead of borrowing crypto with the risk of liquidation.

At the time of liquidation, debtors owed anywhere from just $2,690 on an Azuki, to $332,027 on an Autoglyph. This suggests that NFT liquidation losses can happen for a range of debt amounts. 

Almost all of the 25 worst NFT liquidations took place on NFTfi, except for the BAYC #3455-backed loan liquidated on X2Y2.

Which NFT Collections Have the Worst Loan Liquidations?

10 of the 25 worst NFT liquidations were loans with Bored Ape Yacht Club (BAYC) as collateral. The 10 BAYC-backed loans saw a combined $754,793 in debtor losses (45.7% of total top 25 liquidation losses). In other words, BAYC holders have been hit the hardest with NFT loan liquidation losses.

Larva Labs’ Autoglyphs came in second for NFT collections with the worst liquidations. Autoglyphs made up 4 of the 25 highest loan liquidation losses, representing $372,938 in debtor losses (22.6%). This comes even as the ASCII generative artwork is not commonly sold on secondary markets, with around 6 listings available at the time of writing.

Wrapped CryptoPunks also made up 4 of the 25 worst loan liquidations, but saw lower debtor losses of $177,704 (10.8%). 

Art Blocks follows closely behind, with loans backed by its curated projects recording $164,262 in the worst liquidation losses (10.0%). Specifically, 2 Fidenza by Tyler Hobbs and 1 Archetype by Kjetil Golid artworks ranked among the 25 worst NFT liquidations.

Other NFTs with the worst liquidation losses are an IKB Cachet de Garantie ($92,661 or 5.6% of total) and 3 Azukis ($89,024 or 5.4% of total).

Debtor Loses $28K to Borrow $3K with an Azuki

In one of the most extreme cases, a debtor lost at least 10.5 times what they had borrowed with Azuki #9113. In June 2023, debtor 0x1AC5..fb97 failed to repay a $2,690 loan, and got liquidated when Azuki’s floor price was at $30,872. As a result, 0x1AC5..fb97 lost an estimated $28,182 from the NFT loan.

Another debtor lost at least 5.5 times the amount they owed on BAYC #9830 in late 2021. Debtor geesnfts.eth (0xeAAB..7A09) lost $131,320 when they failed to repay a $23,849 loan, and got liquidated at BAYC's floor price of $155,169 then.

Among the 25 worst NFT liquidations, there are 5 more cases whereby the liquidation losses were higher than the debts owed.

When Did the Worst NFT Liquidations Happen?

The 25 worst NFT liquidations happened between October 2021 and June 2023. Q2 2022 recorded the highest $477,255 in debtor losses across 6 liquidations, followed by Q2 2023’s $405,845 losses from another 6 liquidations. 

On a monthly basis, April and June 2022 saw the most liquidation losses by far, with debtors losing $255,702 and $221,553 respectively.

That said, the worst NFT loan liquidations have been relatively spread out over a period of time. This perhaps shows that debtors risk suffering losses from poorly-managed loans at any time, regardless of market conditions. 

Top 25 Worst NFT Loan Liquidation Losses

Ranking the largest losses incurred by debtors (or borrowers), on loans that were liquidated because they failed to repay on time, in USD terms:

Ranking Liquidated NFT Loan Debtor Losses (USD)
1 BAYC #2162 $194,861
2 Autoglyphs #329 $142,397
3 BAYC #9830 $131,320
4 Autoglyphs #341 $101,648
5 Autoglyphs #204 $100,036
6 BAYC #6108 $93,414
7 IKB Cachet de Garantie #98 $92,661
8 Fidenza by Tyler Hobbs #858 $81,089
9 BAYC #3959 $77,369
10 BAYC #9119 $73,900
11 CryptoPunks #6507 $57,460
12 BAYC #1834 $51,503
13 Fidenza by Tyler Hobbs #931 $46,572
14 CryptoPunks #2955 $43,522
15 CryptoPunks #8539 $43,522
16 BAYC #1075 $40,677
17 BAYC #6648 $37,093
18 Archetype by Kjetil Golid #23 $36,601
19 CryptoPunks #6413 $33,199
20 Azuki #6184 $30,594
21 Azuki #6786 $30,248
22 Autoglyphs #265 $28,856
23 Azuki #9113 $28,182
24 BAYC #3455 $27,900
25 BAYC #1243 $26,756

Methodology

The study examined the worst Ethereum NFT loan liquidations by debtor losses, which was calculated from the difference between loan debt amount and collection floor price at liquidation, based on SnowGenesis, CoinGecko NFT and NFT Price Floor data. Potential wash trades were excluded. The loan debt amount includes both principal and interest. For Wrapped CryptoPunks loans, CryptoPunks floor price was referenced instead due to liquidity considerations.

This study is for illustrative and informational purposes only, and is not financial advice. Always do your own research and be careful when putting your money into any crypto or financial asset.


If you use these insights, we would appreciate a link credit to this article on CoinGecko. A link credit allows us to keep supplying you with data-led content that you may find useful.

Curious to find out more about our previous research studies & statistics? Check out this one we did on the top NFT traders by realized profits.

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Lim Yu Qian
Lim Yu Qian
Yuqian is a crypto research analyst at CoinGecko, covering a range of topics from NFTs to ETFs, crypto adoption and interest, and beyond. She's especially fascinated by the philosophical and socioeconomic aspects of crypto. She holds a Bachelor of Social Sciences with Honors from the National University of Singapore. Follow the author on Twitter @solosbrqt

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