The Solend community wants to withdraw funds from a Solana whale from the platform to protect it from possible harm. The DeFi community received heavy criticism for this on Twitter.
A Solana whale borrowed 108 million USDC on DeFi lending platform Solend, depositing 5.7 million SOL tokens. As crypto prices could fall further, the Welsh's position could be liquidated, leading to a crash of the Solana network and Solend.
Solana-Whale is close to liquidation
As reported by CNBC , 21 million USDC of Wales (20% of total position) would be liquidated if Solana price falls below USD 22.30. The Solana price is currently around USD 36. Due to the current crypto bear market, the Solend community became concerned that the liquidation of the Wales could lead to a cascade of liquidations.
Wales' holdings account for around 95% of Solend's SOL liquidity, while USDC's borrowed accounts for 80% of all USDC's loans. Should the Wales' position actually be liquidated, then the deposited Solana will be sold. The resulting downward spiral of the quite illiquid protocol could not only lead to the Solana price falling further. The Solana blockchain could also be overloaded and crash due to the high number of transactions involved. Ultimately, in this case, the pool would lose most of its liquidity and the DeFi platform would suffer massive damage.
On Sunday 19 June 2022, the Solend DAO voted on how to deal with the Wales' funds. The aim of the SLND-1 proposal was to take over the whale's account with a smart contract update and liquidate it via an OTC trade. Once the threat of liquidation is no longer present, the smart contract should be reversed.
The community voted overwhelmingly in favour, with 99.8% voting yes.
But does this approach really fit the principles of DeFi? In fact, DeFi users should be able to decide for themselves how to handle their money. The DAO proposal sparked an outcry on Twitter, and Solend drew heavy criticism from the crypto community, although the Solend team said it did not vote for the proposal itself. Bitcoin Magazine’s Dylan LeClair described the process as “comedy”:
Solend publishes new new application
The SLND2 proposal was then published on June 20, 2022. This is intended to reverse the previous request SLND1:
“We heard your criticism of the SLND1 and the way it was conducted. SOL's price has steadily increased, giving us some time to collect more feedback and consider alternatives.
We suggest the following:
Invalidate the last proposal Extend
the governance voting time to 1 day Prepare
a new proposal that does not include emergency powers to take over an account.”
How the funds from the Solana whale will be used, how the Solana course will develop and how the Solend community will vote on the proposal is currently still open. The risk of liquidation is still there. If the Bitcoin price loses the USD 20,000 mark as support, then this could sweep the prices of the altcoins and the whale could actually be liquidated.
The SOL course has been able to recover since Sunday and has risen together with the Bitcoin course. At the time of writing, the SOL price is around $40, up around 20% from Sunday's low.
Disclaimer
All information contained on our website has been researched to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action that the reader takes based on the information found on our website is entirely at their own risk.
My Top Picks
Honeygain - Passive earner that pays in BTC or PayPal
MandalaExchange -The Best no KYC crypto Exchange!
BetFury - Play And Earn BFG for daily Bitcoin and ETH dividends!
Pipeflare - Faucet that pays in ZCash and Matic, Games pay in DAIWomplay - Mobile dApp gaming platform that rewards in EOS and Bitcoin
Cointiply - The #1 Crypto Earning Site
Torum - Join the latest Social Network and earn TRM for Free!LiteCoinPay -
The #1 FaucetPay earner for LitecoinLBRY/Odysee - YouTube Alternative that lets you earn Money by viewing videos!FaucetPay - The #1 Microwallet PlatformFREEBTC - The #1 FaucetPay earner for Satoshi'sFaucetCrypto - An earning/faucet site that pays out instantly
FireFaucet - An earning site that pays better for some than Cointiply
DogeFaucet - Dogecoin Faucet
xFaucet - BTC, ETH, LTC, Doge, Dash, Tron, DGB, BCH, BNB, ZEC, FEY - Claim every 5 minutes
Konstantinova - BTC, ETH, LTC, Doge, Dash, Tron, DGB, BNB, ZEC, USDT, FEY, 25 Claims Daily
Comments
Post a Comment