Friday, March 1, 2024

Solend’s Governance Proposal Overturns Vote To Take Over Risk Whale

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Solend’s governance proposal overturned the vote to take over the risk-whale wallet and take over the DEFI lending protocol’s wallet got invalidated after a follow-up vote as we can see more today in our latest cryptocurrency news.

The decentralized autonomous organization governing Solend which is a Solana-based lending platform invalidated a previous vote which allow it to have access to a whale wallet that was putting the protocol at risk.  Solend’s governance proposal is getting invalidated in a follow-up vote and the DAO prevented the vote that could have granted access to a whale wallet that was putting the protocol at risk. The whale in question is the platform’s biggest user who deposited 5.7 million SOL which accounts for more than 95% of the Solend deposits to borrow $108 million worth of USDT and USDC.

According to Solend, if SOL dropped to $22.30 the wallet ran a risk of getting liquidated for 20% of the borrowing or about $21 million. The Solend team said that giving the users six hours to vote on the proposal to take over the wallet:

“It would be difficult for the market to absorb such an impact since liquidators generally market sell on DEXes. In the worst case, Solend could end up with bad debt.”

The platform argued that it was unable to get the whale to reduce risks or 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.”

While the initial vote was passed it faced backlash from members of the community and Delphi Labs General Counsel Gabriel Shapiro accused Solend of setting a bad example that was not only contrary to every way to the Defi ethos but was illegal. Solend asked users to vote on a new proposal to overturn the vote which received 99.8% yes votes. Solend co-founder Rooter explained:

“We’ve been listening to your criticisms about SLND1 and the way in which it was conducted. The price of SOL has been steadily increasing, buying us some time to gather more feedback and consider alternatives.”

The new vote increased the governance voting time to a day while the Solend team is expected to come up with a new proposal that will not involve emergency powers to take over the account. SOL is now changing hands at over $36 up by 12% in the past day.

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