LIQUIDATION PANIC| SOLEND PASSES GOVERNANCE VOTE AGAINST WHALE
Ever heard of Solend? Solend Labs happens to be the autonomous mechanism curating interest rates for lending on Solana. The platform allows users the opportunity to borrow over 40 different assets across several pools on the Solana protocol.
With about $412 million in total assets supplied and $169 million of total assets borrowed, the decentralized lending and borrowing protocol is a sure bet for crypto traders and investors. A list of assets available for lending and borrowing on the platform includes:
•Coin98
•Solana Monkey Business Droplet •Shadow Token
•UXD Stablecoin
•Star Atlas DAO
•Bonfida
•Wrapped SOL
•USD Coin
•USDT
•Tulip
•Saber Protocol Token
And a lot of others.
Very recently, the DeFi platform decided to enact a governance vote to control a certain whale account in a bid to avoid liquidation problems.
Users of Solend on Sunday decided to vote to engage in a forceful takeover of a Solend whale account, which happens to be the largest account on the protocol. Here’s why. The whale’s humungous margin position triggered Solend contributors, predicting a fatal on-chain liquidation dive.
The said governance vote was unexpected and the first of its kind for the lending and borrowing platform. The vote will give Solend Labs access to the whale’s assets which is worth about $20 million in SOL (Solana native token) and liquidated through an OTC means Instead of a DEX which is the primary harbor for liquidation on DeFi. This would only come into effect if the price of SOL plunges too low. The lending platform speculated that if it should liquidate the whale’s position via on-chain means, there could be chaos in the Solana DeFi market. Hence, an OTC service would likely suffice in the situation to avoid the chaotic market outcome for Solana.
Numerous speculations are on about the governance vote and a fraction of crypto users presume that it wasn’t a decentralized line of action, rather the protocol was adopting a centralized approach on DeFi.
The proposal for the token holders read thus:
“Vote Yes: Enact special margin requirements for large whales that represent over 20% of borrows, and grant emergency power to Solend Labs to temporarily take over the whale’s account, so the liquidation can be executed OTC.
Vote No: Do nothing.”
97.5% of Token holders who participated in the governance voted “yea”
The Solana token(SOL) which saw a massive price drop about 3 weeks ago due to the crash, amidst the current situation of the market and ecosystem, SOL seems to be moving up. Recording Solana has an increased price of about 11% in the last 24 hours moving up to $35.34/SOL at the time of documentation.
