Analysis

Solend Group Votes to Backtrack on Whale Takeover Plot

Key Takeaways

  • The Solend group has handed a proposal to invalidate an earlier plan to take over a whale’s account.
  • Solend had urged customers to vote on a proposal that recommended intercepting the pockets of the protocol’s largest consumer to execute an over-the-counter liquidation, nevertheless it confronted backlash.
  • It is the most recent stress take a look at to return out of a market in decline. SOL has since bounced, limiting the chance of the whale’s liquidation.

It’s the most recent main controversy to come up attributable to rocky circumstances within the cryptocurrency market.

Solend Exposes DeFi Governance Flaws

Solend is going through its greatest PR catastrophe but after it rushed by a DeFi governance vote to take over a whale’s account. In a transfer that seemingly acknowledges the blunder, the Solend group has since voted on a proposal to scrap the unique plan. 

Solana’s high lending protocol confronted criticism over the weekend after it urged its group to vote on a governance proposal to take over its greatest consumer’s account. Solend had devised the scheme, dubbed SLND1, after noticing {that a} so-called “whale” was going through a liquidation if SOL dropped as little as $22.30. The whale had deposited $170 million value of SOL collateral to borrow $108 million in stablecoins, and so they stood to lose $21 million if a liquidation went by. Solend famous {that a} liquidation may trigger “chaos” on Solana as a result of the low liquidity would probably result in a cascading impact, including that large liquidation occasions had prompted community clogs prior to now. The answer, the staff argued, was so as to add new margin necessities for customers with giant deposits to make liquidations much less seemingly, and take over the whale’s account to execute an over-the-counter liquidation. The proposal handed in 24 hours, helped by one pockets representing 90% of the vote, however not with out backlash. 

Group Backtracks on Account Intervention Plan  

Whereas the proposal was voted in, many members of the crypto group slammed Solend for the plan shortly after it went dwell. “Message to the @solendprotocol devs… I’m fucking begging you not to do that… I do know you’re scared. I do know your VCs are pressuring you. I do know a few of your Solend bag holders are pressuring you… However that is flat out incorrect and you already know that,” wrote a pseudonymous Twitter consumer figuring out as ThePeoplesDegen. “Ethos/Values > Cash… I actually hope the devs get sued into oblivion and this units a tough precedent,” added THORmaximalist. UpOnly podcast co-host Cobie assessed the proposal with a succinct tweet: “Comedy.” 

Within the fallout from the SLND1 fiasco, Solend offered the group with a second proposal that means invalidating the unique proposal and devising a brand new plan that might not resort to taking on somebody’s account with out permission. “We’ve been listening to your criticisms about SLND1 and the way in which wherein it was carried out,” the proposal dubbed SLND2 learn. The vote for SLND2 handed early Monday, that means the group will now have extra time to give you a plan to keep away from a potential disaster in a liquidation occasion.

Though the crypto market has confronted a dramatic downturn wreaking havoc throughout the ecosystem this month, Solana loved a bounce this weekend on the tails of different main belongings like Bitcoin and Ethereum. Since SOL is used as the bottom asset and collateral for Solana DeFi, that’s excellent news for Solend​​—and the whale it was planning to liquidate.

Disclosure: On the time of writing, the creator of this piece owned ETH and a number of other different cryptocurrencies. 

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