Solend Votes to Take Over a Whale’s Account To Control his Liquidation: Is Decentralization Real?
Users of Solend, a Solana-based so called ‘decentralised lending protocol, decided to take control of one of the protocol’s largest accounts, which is a strange event. The governance vote, which is a first for the network, will grant Solend Labs emergency control over the account, allowing the protocol to liquidate the whale’s susceptible assets via over-the-counter trades rather than decentralized exchanges.
What is Solend?
In a DeFi environment, lending and borrowing have been demonstrated to be crucial. On Solana, Solend is the most popular algorithmic and decentralized lending and borrowing protocol. Anyone with access to the internet can earn income by lending their assets, and their deposits can be used as collateral for borrowing. Solend can scale 100 times faster and 100 times less expensive than other Popular DEFI protocols like Aave and Compound. In Solana, Solend aspires to be the best user-friendly and safe solution.
However, looking at what’s happening with Solend now, SAFE may not be the right word to use.
Why is this Happening?
The move is intended to insulate the service from the current bear market in the cryptocurrency market. Solana’s price has plummeted in the wake of the crypto market’s recent bear market, and platforms like Solend must safeguard its liquidity to avoid major disruptions like the one experienced by the Luna token last month.
The whale account, with its unusually huge margin position, has posed a threat to on-chain liquidation, according to the DeFi protocol. They alleged that the whale’s enormous holdings put the Solend protocol and its users in a financially precarious position.
What is the total value of the whales’ assets?
Solend, a website that allows users to deposit cryptocurrencies for lending to other users, has a single “whale” responsible for 95% of the SOL cryptocurrency placed on its platform, which is worth 107 million dollars.
The same individual has borrowed 88 percent of the USDC, a stablecoin tethered to the US dollar that is accessible. The account has borrowed about $108 million in USDC and Ethereum in total. Solend claims to have loaned a total of $195 million in crypto assets on its webpage.
What does Solend have to say about it?
The Solend platform stated that it attempted to contact the whale through Twitter and its own networks, as well as on-chain communications, but received no response from the whale account. Solend has also been in contact with market makers to investigate liquidation possibilities, according to the statement. “Despite our best efforts, we haven’t been able to convince the whale to lower their risk or even communicate with them. Given the current state of the whale’s unresponsiveness, it’s evident that action must be made to reduce risk”, the post said.
This is crypto, and the industry is meant to be heading towards decentralization, notably DeFi. Things like this should not be happening in a decentralized financial system.