NFT Market Leverage - The NFT market is experiencing a pump in floor prices [1] - This pump is potentially being propped up by leverage [1] - There are potential dangers associated with this leverage [1] Specific Projects - Leverage is being used in Pudgy Penguins [1] - Leverage is being used in Bored Apes [1] - Leverage is being used in Azukis [1]

NFT Market Leverage - The NFT market, particularly for projects like Pudgy Penguins, Bored Apes, and Azukis, exhibits significant leverage on platforms like Blur [1] - Borrowers are using loans to finance a large portion of NFT purchases, exemplified by buying a Pudgy Penguin with 2 ETH instead of 16 ETH, borrowing the remaining 14 ETH [1] - A substantial percentage of current NFT loans have a loan-to-value (LTV) ratio of 70% or higher, indicating high leverage [2] Risk Assessment - High LTV ratios, such as borrowing 11+ ETH to purchase a Pudgy Penguin, represent a bet on the floor price increasing [2] - The risk is currently perceived as low due to rising floor prices, adequate bid depth, and organic sales [2] - The end of Blur farming has eliminated the riskiest loan offers seen in 2023 and 2024, but has also weakened bid depth [3] Market Monitoring - Debtors are likely to take profits if the price increase slows or reverses, especially as interest accumulates on loans [3] - The market should be monitored for potential profit-taking behavior that could impact floor prices [3] - If the floor price decreases and the loan cannot be refinanced, the borrower risks losing the initial investment (e g, 2 ETH) and the NFT [2]