The logo of cryptocurrency platform Solana.
Jakub Porzycki | NurPhoto via | Getty Images
Decentralized finance platforms are going to extreme lengths to limit the fallout from a sell-off in cryptocurrencies.
Solend, a lending platform built on the Solana blockchain, tried to gain control of its largest account, a so-called “whale” investor that it said could significantly influence market movements.
Solend’s users have since voted to block the move.
What is Solend?
The account concerned had deposited 5.7 million sol tokens into Solend, accounting for more than 95% of deposits. Against that, it was borrowing $108 million in the stablecoins USDC and ether.
If sol’s price sank below $22.30, 20% of the account’s collateral — about $21 million — is at risk of being liquidated, Solend said. Sol was trading at a price of $34.49 on Monday.
On Sunday, Solend passed a proposal granting it emergency powers to take over the whale account, an unprecedented move in the DeFi world.
Solend said the measure would allow it to liquidate the whale’s assets via “over-the-counter” transactions — as opposed to on-exchanges trades — to avoid a possible cascade of liquidations.
DeFi apps under strain
MakerDAO, the creator of a dollar-pegged stablecoin called DAI, recently disabled a feature that allowed traders to borrow DAI against staked ether, a derivative token causing mayhem in the crypto market.
StETH is meant to be worth the same as ether, but it’s been trading at a widening discount to the second-biggest cryptocurrency. Moving in and out of stETH isn’t easy, and that’s resulted in liquidity issues at large crypto lenders and hedge funds like Celsius and Three Arrows Capital.
Source: https://www.cnbc.com/2022/06/20/users-of-defi-app-solend-block-attempt-to-take-over-whale-account.html