Borrowing and Lending Service Solend is Going Back to the Ballot Box
Solend Cryptocurrency Lending and Borrowing Platform
Solend, a cryptocurrency lending and borrowing platform for tokens like SOL and USDC, is letting its governance token holders vote on the proposal for six hours. If you vote "yes" on SLND2, you will: 1. Invalidate the first vote; 2. Extend voting periods to one day's length; 3. Begin work on a new, less drastic "emergency powers"-free solution to the whale wallet crisis.
Co-founder Rooter said in a blog post, "We recognize that a voting time of 1 day is still short," further he added, "but we need to act swiftly to address the systemic risk and the fact that normal users can't withdraw USDC. We ask our community to participate in governance in the next few days. Will revisit the voting time in a future proposal."
Liquidation Crisis
The anonymous wallet at the center of the crisis has deposited 95% of Solend's SOL pool and accounted for 88% of USDC borrows. However, with SOL's plummeting price, Solend's single-largest user came perilously near a giant margin call. If SOL reaches $22.30, the protocol will automatically liquidate up to 20% of the whale's collateral.
Protocol engineers were concerned that multi-million dollar liquidations might overwhelm Solana's decentralized exchanges, causing the network to stutter. They managed to get a vote passed to take control of the whale wallet and liquidate it more smoothly via OTC. Till the time of publishing, the new vote had not yet passed. Like the last one, it will require a 1% quorum, which will be tough to achieve when token whales like VCs are afraid to tip the scales. Indeed, the prior proposition only passed due to the intervention of a single account to boost turnout.