Cryptocurrency platform Solana logo.
Jakub Porzycki | Via NurPhoto | Getty Images
Decentralized financial platforms are extremely long to limit fallout from cryptocurrency sold out.
Solend, a lending platform built on the Solana blockchain, sought to gain control of its largest account, the so-called “whale” investor.
Since then, Solend users have voted to block the move.
What is Solend?
Solend is a DeFi app that allows users to borrow and lend money without going through an intermediary.
Solend said one whale was sitting “in a very large margin position”, potentially endangering the protocol and its users. “In the worst case, Solend can end up in bad debt,” the company said. “This can cause confusion and strain the Solana network.”
The accounts involved have deposited 5.7 million sol tokens in Solend, accounting for more than 95% of the deposits. In contrast, it borrowed $ 108 million from Stablecoin USDC and Ether.
If the price of Sol falls below $ 22.30, Solend said there is a risk that 20% of the collateral in the account (about $ 21 million) will be liquidated. Sol was trading at a price of $ 34.49 on Monday.
On Sunday, Solend passed a proposal to give urgent authority to take over the whale’s account. This is an unprecedented move in the DeFi world.
Mr. Solend said the bill would allow whales to clear their assets through “over-the-counter” transactions rather than on exchanges, avoiding a chain of clearing.
Defi nervous app
The move sparked a backlash on Twitter, questioning the decentralization of Solend. One of DeFi’s core beliefs is that it aims to eliminate central institutions such as banks.
But by Monday, Solend users were asked to vote for a new proposal to overturn the previous vote. The community voted overwhelmingly in favor, with 99.8% voting “yes”.
This blunder indicates that DeFi (a type of “wild west” where users make their own transactions and loans peer-to-peer) has been involved in the collapse of cryptocurrencies.
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