A follow-up vote has invalidated Solend’s controversial governance proposal to take over the DeFi lending protocol’s largest wallet.
According to governance proposals, Solend, a money market dApp and the largest Solana-based protocol, is scrambling to address exposure from a whale that holds 5.7M SOL worth $215.7M.
Solend’s community approved a plan to acquire control of the whale’s accounts earlier this week, then reversed course after decentralisation advocates opposed it, and is now considering a third proposal that will draw down borrowing limits so that borrowed positions exceeding $50M will be progressively liquidated.
The Whale is Back
Solend posted a tweet Tuesday morning saying that the whale had begun moving millions of dollars’ worth of cryptocurrencies from the wallet at the center of the governance drama.
This avoids the risk of contagion resulting from a liquidation that could have caused hundreds of millions of dollars in losses.
Liquidation Risk
5.7 million SOL were deposited into Solend’s protocol by the whale in question – more than 95% of the platform’s deposits – and was used to borrow approximately $108 million in USDC and USDT.
The protocol would have automatically liquidated up to 20% of the large investor’s collateral if SOL had hit $22.30, and possible damage could have been done to the broader Solana ecosystem. Protocol developers proposed a governance vote to take control of the account and manage the risk.
On Tuesday, the wallet’s actions came as the SOL price rose by 12% over 24 hours to $37. Because the liquidation levels are well below current prices, the whale can take necessary precautions to prevent unforeseen damage.