Monday, December 5, 2022

Solana DeFi Platform Voted To Control Whale Accounts: Report

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The Solana DEFI platform Solend voted to control whale accounts and the users granted emergency powers to Solend Labs to take over the whale account temporarily so let’s read more today in our latest Solana news.

The users of the Solana-based lending service Solend voted on Sunday to force a takeover of the protocol’s biggest account or a whale whose high margin position was getting close to a disastrous on-chain liquidation cliff. The governance vote which is Solend’s first will grant Solend LAbs emergency powers to liquidate the whale’s vulnerable assets via OTC trades instead of decentralized exchanges where the DEFI liquidations often occur if the price of SOL drops.

The Solana DEFI platform voted for Solend to get emergency powers and it said the on-chain liqudations of the position could cause a mess in the Defi markets. Doing so over an OTC service will avoid such an outcome but it also usurps entirely the smart contract coded protocol that follows for every other borrower liquidation. The proponents of intervention argued that Solend whale was no typical user. The account brought 5.7 million SOL onto Solend and 95% of the pool’s deposits. It borrowed $108 million in stablecoins which is more than anyone else.

If the liquidation price of $22.30 SOL hit it will be liable for $20 million while now SOL is trading at $32.27. the proposal reads:

“Despite our efforts, we’ve been unable to get the whale to reduce their risk, or even get in contact with them. With the way things are trending with the whale’s unresponsiveness, it’s clear action must be taken to mitigate risk.”

The proposal asked token holders to vote on the following:

“Vote Yes: Enact special margin requirements for large whales that represent over 20% of borrows and grant emergency power to Solend Labs to temporarily take over the whale’s account so the liquidation can be executed OTC.

Vote No: Do nothing.”

The Solend governance token holders who took part voted “yes” with 97.5% of the vote and the proposal cleared a 1% quorum in the affirmative with a 1.13% share. The single yea voter made the difference as well since the account was the main reason the proposal cleared this 1% mark.

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