Bitcoin Forum

"Users of Solana-based borrowing and lending service Solend voted Sunday to force a takeover of the protocol's largest account: a "whale" whose "extremely large margin position" was getting, according to Solend contributors, dangerously close to a catastrophic on-chain liquidation cliff.

The unprecedented governance vote, Solend's first, will grant Solend Labs "emergency powers" to liquidate the whale's vulnerable assets (around $20 million in SOL) via over-the-counter (OTC) trades instead of decentralized exchanges – where decentralized finance (DeFi) liquidations usually occur – if the price of SOL drops too low.

Solend Labs said on-chain liquidation of the whale's position "could cause chaos" in Solana's DeFi markets."

Projects that have "true" decentralization should not be able to shut the network down.

This is one of the important reasons why BTC will always have the true and intrinsic value that some altcoin holders tend to forget, the true decentralization.

Thanks for reading my post.

It is pretty amazing that this is even possible.  Solana definitely has a lot of tradeoffs in order to try and achieve their goals.  I know I would never keep any big amount of money on that chain for this very reason.  This time it's only this one account (supposedly).  Maybe next time it's the largest 1000 accounts.  One thing is certain.  Solana has proven it will not make a good store of value.  I can still see it providing decent service for NFTs that might have interesting utilities, but trusting them to store value...  Not so much.

I was optimistic on them when I am starting to see that they are gaining traction but that's not enough for me to buy it.
No doubt that bitcoin is still the best and its network is secured as it is. The holders of sol might start to think if they have to sell it already if it is not looking good anymore for them.

Away from even Solend. Let's first talk about Solana, the Semi decentralized blockchain on which solend is built on. Didn't that network shutdown two times for hours not so long ago?

I really pity folks who bank on this new Ponzi schemes they call DeFi's on top of shitcoin proof of stake blockchains.

People still defend saying this is a protocol in Solend and not Solana which they were voting to take control over a whales wallet or not and taking control won the votes. Its somehow to save the liquidation which I guess saving face.

This is also what happened to Bancor which they tweeted to temporarily paused the protocol. I guess they will explain soon that there are levels of decentralization.

 https://twitter.com/Bancor/status/1538662297635282949

$20m doesn't sound like it should've had much of an affect on Solana's price if the investment pool was big enough (or even an insurance fund type system)... Are they going to have a vote every time something like this happens? Also this means they might still have $20m sat waiting to be liquidated - I don't think anyone smart is going to be dcaing out of a position like that (a more sustained alt crash normally comes after a btc one - compared with both btc and the dollar).

Whats even more amazing that the price of Solend token went up during last three days... Once I read the news I checked it on CMC out of curiosity (thank God I never invested in it) expecting to see at least some price drop.

I mean there are various reasons for price going up but it could be as well that some people continued investing into this project.

We surely live during strange times  ;D

Agreed! Also this Solend story could be the beginning of the rude awakening from what they call DeFi.

Unfortunately, some people ("thanks" to media) will connect that event to crypto overall including some decent projects with a great technology. I can almost hear some people saying "Well as I have told you, all crypto is scam..."

This is not the first time that Solana has experienced huge problems. But what made me wonder is that Solana remains one of the top cryptocurrency projects. It remains popular. I wonder how this project avoided backlash when it has already made obvious that it is not what it preached. Aside from this takeover, which should cause a certain level fear among Solana investors, there were multiple outages that the network has experienced. Are the standards so different among crypto supporters?

Although, altcoin projects try to describe themselves as decentralized and they try to provide DAO votes, they are not actually decentralized.

Because big parts of token belong to internal team, seed or private sale investors. With their dominance, they can bias result of DAO vote. Terra, Solend are good case studies that DAO votes in altcoin projects are not make sense.

Bitcoin is absolutely different. No internal team, no seed or private sale investors. The only founder is Satoshi Nakamoto disappeared since 2010. This decision makes Bitcoin is really decentralized from asset distribution to vote power on the network. Will Satoshi Nakamoto come back? Might or might not, we can not say Yes or No. If we consider assumed reasons why Satoshi Nakamoto disappeared, it leads to another assumption that Satoshi will never come back.

Inactive and probably lost coins are gifts from Satoshi and early adopters of Bitcoin, for its really decentralization and of course Bitcoin value.

• https://www.lookintobitcoin.com/charts/hodl-waves/

There's a lot of misunderstandings in this thread. The story is about Solend — a Solana-based platform, not necessarily Solana itself. Just like how Uniswap and Aave are not Ethereum, but are Ethereum-based platforms.

You should have used a better example because Ethereum is just as bad as any of the other shitprojects if not worse. Lest we forget how they reversed a lot of ethereum blocks so that they could save their own ass when they lost a lot of money in a "bet" on DAO made in their own flawed protocol. They didn't even fix the flaws, they just reversed the blocks to get their money back!

The best way to fix such people is education.

Demonstrate that while stuff like Solana are cryptos, DeFi, and FTs, are not cryptocurrencies, they are merely technology that utilizes cryptocurrencies.

Show them that a crash in DeFi really has nothing to do with crypto and has more to do with the crappy design of DeFi projects.

Action starts in the crypto news websites themselves, first they stop reporting aout DeFi and havng sections based on it, then the rest of the media will follow.

Yea sure you can definitely criticize Ethereum (and the broader cryptocurrency space) for all those issues all you want, but I was just stating facts due to a lot of people here totally misunderstanding the controversy.

Exactly. There's nothing to do with Solana but another issue here is Solend which is a Solana-based Defi platform that wants also to save the Solana price which for me is a very red flag.
There are a lot of people who are against this, the fund of 1 user will be forced to liquidate just to save the others.
I immediately withdraw my funds on that platform after I heard about this issue.

I try to do that on everyday basis.

But thinking globally, if I were in a position to make changes to a current educational system, in the future, I would introduce an elective focused on blockchain ("Blockchain 101") beginning from high school/college. I am 100% serious. Certainly not a requirement but something that youngsters can learn if they elect to do so.

I am sure there will be some crypto enthusiasts in the future who would be willing to do that to prepare young generation to all these  benefits that blockchain can bring to everyday life. In turn, after increasing general awareness of this subject, younger generation may bring up some fresh ideas to crypto as well. Its a "win-win" situation.

  

I did not know about this aspect of ETH. Thanks for sharing!

I agree that DAO can be biased especially, in my opinion, when it comes to smaller projects with a small sample size of voters outside of the team / statistically insignificant results / some sorts of voting restrictions. As you made a good point that DAO can not always make sense and Solend was a clear example of that.   

It's not correct.

Small or big project, it is not big matter. Causes of biased DAO come from tokenomics of a project. If a founder, core team (mostly) and earliest investors (in seed sales) own too dominant tokens in total supply, they can bias DAO vote in a result they want. You rarely find altcoin projects with fair distribution.

The Solend case is more terrible, it is not only a biased DAO vote but also an attempt to steal money in a wallet. It is unacceptable, unethical!