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The Thanos of the NFT world! How the big brother with infinite gems can snap his fingers and destroy the NFT market

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The Thanos of the NFT world! How the big brother with infinite gems can snap his fingers and destroy the NFT market

The influential figure, Huang Licheng, who holds a large number of blue-chip NFT projects, has always been a prominent figure in the NFT sector. However, he has sold hundreds of BAYC and MAYC within the past few hours, causing a rapid market price collapse. What has happened to prompt this decision by the influential figure?

Trigger for the NFT Price Drop: Large Holders Selling Off, Flaws in Airdrop Mechanism

According to DeFi researcher Liam Herbst's tweet, Huang Licheng is leading the way in the NFT market Blur's second season airdrop points, by bidding over thousands of ETH on multiple top projects, gaining 4% of Blur's total bidding points.

Note: Users can accumulate points on Blur through bidding, listing, and trading, with higher points enabling more BLUR token airdrops in the future. Users intentionally engaging in these actions to accumulate points are called airdrop farmers.

Machi, the leader on the leaderboard, Huang Licheng

However, recent decisions by Yuga Labs' seed investors Ovie Faruq and Mike Anderson to sell off 72 Bored Ape Yacht Club (BAYC) NFTs have changed the game.

Although the minimum price of BAYC did not change significantly at the time due to Huang Licheng's heavy acquisition of these sold-off BAYCs, this also led to the evaporation of millions of dollars in liquidity that Huang Licheng had provided in Blur's bidding market. To replenish the depleted ETH, Twitter data tracking channel Lookonchain also found that Huang Licheng converted a large amount of USDT and APE to ETH in the market on Thursday, the 23rd.

Simultaneously, Huang Licheng continues to buy and sell NFTs on Blur through bidding, keeping his ETH holdings above 1,000.

Additionally, NFT collector poof discovered through data that about 20% of Blur's trading volume comes from only 15 wallets, with around 50% coming from fewer than 300 wallets. It is clear that the high trading volume on Blur is driven by airdrop farmers artificially generating it.

Related reading: Post-Blur Airdrop Market Analysis | Trading Volume Hits New Highs, Did OpenSea Really Lose in Trading Volume?

In response to this phenomenon, Liam Herbst stated that these whales incur a 0.5% royalty fee loss in each transaction and may also accumulate a large amount of NFTs due to frequent bidding.

Once this pattern of behavior begins, other whales may start down the same path, leading to more accepted bids and lower minimum prices.

Big Brother Machi Starts Selling in Bulk! Floor Prices Plummet, BendDAO Liquidation Crisis

Shortly after Liam Herbst warned on Twitter that prices might spiral downward, Huang Licheng completed the sale of hundreds of NFTs within the past few hours.

He sold approximately 136 BAYCs in the price range of 58-65 ETH, many of which were purchased earlier at prices of 76-78 ETH, and also sold 42 MAYCs in the price range of 14-14.5 ETH.

Currently, Huang Licheng only holds 57 BAYCs, with 34 listed. Additionally, there are only 44 MAYCs left, with only one not listed.

Despite selling at prices lower than the initial purchase, overall, Huang Licheng has made profits of nearly a thousand ETH from trading BAYCs and MAYCs. With substantial assets and a large number of NFTs, Huang Licheng is leveraging his advantages to influence the prices of these projects.

Realized P&L is positive for both BAYC and MAYC

Such massive selling has led to a significant drop in the floor prices of these two projects in a short period. According to NFTGO market data, BAYC's minimum price has dropped by 7.8% within 24 hours, and MAYC has experienced an even more severe drop of 9.2%.

Furthermore, this phenomenon has also affected the NFT lending market BendDAO. According to Dune Analytics data, there were a total of 224 repayment actions on 2/24 due to the rapid price drop, setting a new record.

However, checking BendDAO's health factor alert list, there are still 14 BAYCs on the brink of liquidation with a health factor below 1.1.

Note: The lower the price, the lower the health factor, and those below 1 are subject to liquidation.

Airdrop Farmers Facing Prisoner's Dilemma

As the bidding mechanism in the Blur market allows bidders to bid on multiple projects simultaneously, there is a phenomenon where the depth of the bidding market exceeds the total assets held by users.

However, Huang Licheng, as the leader of the bidding market, is dumping on the market and draining liquidity, not only causing some project prices to drop directly but also forcing airdrop farmers who only want to bid but not transact to accept more NFTs than expected.

These airdrop farmers are now facing a situation similar to Huang Licheng's initial state, with insufficient ETH due to NFT purchases. If they want to continue bidding, they need to sell other assets or choose to sell their NFTs at a loss in a timely manner.

Liam Herbst believes that the best scenario is for these airdrop farmers to agree not to dump on the market to prevent further price drops and larger losses. However, everyone's asset conditions and considerations are different, making it difficult to reach a consensus.

At present, the blue-chip projects in the NFT market seem to be affected by Huang Licheng's selling spree, with many blue-chip NFT projects experiencing declines of over 5%. In addition to the trigger of the two seed investors selling off 72 BAYCs, Big Brother Machi, who has "unlimited dumping rights" due to his substantial assets, is easily dictating the overall market price trends.

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