Solend to Reverse ‘Emergency Power’ Proposal in a Second Vote as Struggle to Solve Whale Liquidation Crisis Continues

Cryptocurrency
Solend to Reverse ‘Emergency Power’ Proposal in a Second Vote

 Solend, a Solana-based borrowing and lending platform, will go back to the ballot box in a flash vote on whether to go ahead with Sunday’s proposal to take control of the platform’s largest account. The Solana DeFi Protocol’s largest account is a $100 million+ whale’s account on the verge of potential on-chain liquidation. 

The cryptocurrency borrowing and lending platforms for tokens such as SOL and USDC give its governance token holders six hours to vote on Sunday’s proposal. Voting “yea” on the platform would: 1. Invalidate Sunday’s first vote; 2. Extend voting periods to one day; 3. Start work on a new ‘emergency powers’-free solution to the whale liquidation crisis.

Solend co-founder Rotter, in a blog post, said, “We recognize that a voting time of 1 day is still short, but we need to act swiftly to address the systemic risk and fact that normal users can’t withdraw USDC. We ask our community to be active in governance in the next few days. Voting time will be revisited in a future proposal.”

The anonymous whale wallet at the heart of this crisis had already deposited 95% of Solend’s entire SOL pool and 88% of USDC borrowed. If SOL hits $22.30, the protocol will automatically liquidate 20% of the single-largest user collateral. If this were to happen, Solend’s developer fears that this liquidation will create a huge sell pressure on the decentralized exchange, which might even jam the network. 

Twitter erupted when the platform developers announced the takeover of the whale’s wallet. An attorney tagged the process as “illegal,” and a founder derided the execution. At the same time, another competing lending service called it “an indictment of DeFi on Solana.” This twitter backlash is one of the reasons Solend took a turn and opted for second voting.

At the time of writing this report, the new vote has not been passed, and like the previous one, it will also require a 1% quorum. The quorum might, however, be difficult to reach without a whale tipping the scale.

Rooter said, “I guess one silver lining is [because] of all the [negative] attention we’ve gotten, participation should be much higher than average.”

Featured Image: Megapixl © Inueng

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