Solana’s Lending Platform Solend Votes to Temporarily Control the Whale Account

Vignesh Karunanidhi
Solana’s Lending Platform Solend Votes to Temporarily Control the Whale Account
Source: AAX Academy

Solana-based lending and borrowing service platform Solend users voted to control the largest whale account to mitigate liquidation risks.

This is due to the fact that the whale account and its extremely large margin position were posing a threat to an on-chain liquidation. The large holding of the whale was reportedly causing the Solend protocol and the users to be in a risk bubble. The governance vote will grant Solend Labs with ’emergency powers’ to liquidate the vulnerable assets of the whale.

Source: Coingeek

Over $20 million in Solana will be liquidated via OTC trades

Around $20 million in SOL will be liquidated not through decentralized exchanges but through over-the-counter trades. This is due to the fact that on-chain liquidation can cause turbulence in the DeFi markets of Solana. To tackle this, the trades will be done through OTC.

The whale was reportedly a big one as it had 5.7 million SOL deposited and had also borrowed over $108 million in stablecoins. The whale holds over 95% of the main pool deposits and 88% of the USDC borrowings pool. SOL is currently trading at $33.50, and if the price hits $22.30, the whale becomes up to 20% liquidatable of its borrowings. This could create chaos in the market and cause bad debt to solend and affect the Solana network.

“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.”

Proposal stated

The team stated in the proposal that the decision was taken after trying and failing to get in contact with the whale through Twitter and on-chain messages. The whale was unresponsive, which made the team move forward with the decision. The governance passed with 97.5% of voters saying yes.