Friends, Romans, Countrymen, Solend Me Your Ears!
Market Meditations | June 20, 2022
Solend, Solana’s top ranked DeFi protocol by TVL according to DeFiLlama, recently scrambled to bring together a proposal to prevent a worst-case scenario from playing out on the Solana network.
- The proposal was created to intercede a situation involving a whale that held 95% of the SOL in Solend’s main pool. Multiple attempts to contact the whale from various sources were never met with any response.
- This posed a significant threat to the well-being of the protocol with larger implications to the Solana network itself if the loan reached a collateralization ratio resulting in liquidation.
- A liquidation would have been possible if the price of SOL fell to $22.30, resulting in 20% of the collateral being sold to cover the whale’s debt obligation to the lending and borrowing platform.
- This could have put an unmanageable strain on the Solana network and heavily impacted both SOL’s market cap and price, potentially leading to a cascade of liquidations.
- The vote decided on enacting “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.”
With Three Arrows Capital and Celsius making headlines recently, the level of fear surrounding large players’ liquidations is palpable everywhere.