Solend, Solana-based decentralized finance (DeFi) lending protocol, has called for a new governance vote to overturn a recently-approved proposal that gives Solend Labs “emergency powers” to access a whale’s wallet to escape liquidation.
Key Highlights:
- Solend, a Solana blockchain-based lending platform, attempted to seize control of a “whale” account that it said was endangering the protocol.
- It’s a first in the world of DeFi, which tries to reimagine lending and other financial services without the need for intermediaries such as banks.
- Since then, Solend’s users have voted to reject the move.
What is Solend?
Solend is a DeFi software that allows users to borrow and lend money without the need for middlemen.
What happened with Solend?
The crypto lending platform launched a governance vote on Sunday titled “SLND1: Whale Risk Mitigation.” It allowed Solend to lessen the market risk associated with the whale’s liquidation by allowing the lending platform access to the whale’s wallet and allowing the liquidations to take place over-the-counter (OTC).
If the price of SOL declines and the whale is liquidated, according to Solend, the lending platform may “end up with bad debt” and put pressure on the Solana network. Community members were outraged when the idea was approved.
The Solend team conducted a second governance proposal vote to invalidate the previously-approved plan after the community opposed the action, calling it the absolute opposite of what DeFi should be and plain unlawful.
Following the governance decision, Solend will have “emergency powers” to liquidate the whale’s susceptible assets to protect all of its other users.
Over-the-counter trades will liquidate around $20 million in SOL tokens. Over-the-counter trades will be favored as on-chain liquidation might generate turmoil in the cryptocurrency’s DeFi marketplaces.
How much are the whales holding?
In this instance, the whale had deposited 5.7 million SOL and had borrowed almost $108 million in stablecoins.
As per data from CoinMarketCap, SOL is currently trading at $36.76 and is up 15.45% in the last 24 hours.
