Does anyone know if Solend developers have accounts on this forum? Asking for a friend.
TL;DR: “Governance” is a sham. And this has an obvious motive:
Transparent excuses for trying to protect the SOL price.Solend, the largest lending market on Solana is about to have a crippling liquidation of $170m SOL that could crash the network. To prevent this, the decentralized protocol is proposing to seize the user's funds via governance
https://old.reddit.com/r/CryptoCurrency/comments/vfszpt/solend_the_largest_lending_market_on_solana_is/When shit starts to implode, all the true colors of decentralization comes out.
Sounds Centralized to me.
So to prevent this, they are proposing to literally steal the user's funds and execute OTC trades:
Thanks for posting that. (And thanks for the old.reddit link.) It is interesting to me, because I have hands-on experience using Solend—
and I have read the source code to their on-chain program (customized fork of SPL lending). They have an active developer grant program, to which I have sometimes considered applying with various ideas to enhance their protocol, or to build things based on their protocol. I so note, just in case anyone from Solend ever reads this:
This is how you lose people.“Governance” is a euphemism for letting shitcoin whales control a system by a hidden hand, while evading personal responsibility by ascribing centralized executive decrees to a “governance vote”. What does the word “fiat” mean?
In some cases, I think this may be
ethically justifiable—to avoid the hassle of baseless regulatory attacks, at least in theory. At least, the theory is that if any government tries to target no-KYC,
permissionless, unlicensed, totally unregulated financial systems, the answer to “whodunit?” is, “DAO did it”. (Needless to say, my description of what some people are doing is
not legal advice.)
But the general result is awful shitcoinery with financial manipulation of “governance tokens”, plus the detriments of artfully concealed centralization.
Terra did the same thing last month, when a value-stealing hardfork was executed within ten days. The vote was blatantly rigged: Recent LUNA buyers (i.e., everyone who bought in the crash) were prevented from staking so they could vote. Pre-crash LUNA whales then voted to rip off new investors,
and to violate peg obligations to UST holders while tossing them a handful of volatile shitcoins as a booby prize. Against massive protest, the whole thing was pulled off by Do Kwon and a few large DPOS companies. (One large, well-known DPOS company dissented, voted “no with veto”, and shut down their Terra operations after the hardfork.)
Not too long before that, the Juno shitcoin shamelessly stole a whale’s money with a “governance vote”.
And a few years ago, we saw what happened with STEEM: Hostile takeover of the network using
borrowed stake!
Now, if Solend seizes user funds under the rubric of “governance”—wow, just wow! How is this different from a bank? I mean, besides being totally unregulated so the Solend principals can do even worse abuses than a bank—whilst hiding behind the mask of “governance”.
Edited to add: Even their rationalization is nonsense.
Transparent excuses for trying to protect the SOL price.Yes, the DEX ecosystem on Solana may have a little struggle absorbing so much SOL in a liquidation. So what? This is how markets work. And arbitrageurs would make a killing on this, trading between Solana DEXes and CExes.
Whoops! That means the price of SOL would just... crash.
Everywhere.Letting a liquidation of this size to happen on-chain is extremely risky. DEX liquidity isn’t deep enough to handle a sale of this size and could cause cascading effects. Additionally, liquidators will be incentivized to spam the network in an effort to win very lucrative liquidations. This has been known to cause load issues for Solana in the past which would exacerbate the problems at hand.
Every round of cascading liquidations on Solana causes “load issues” for the reason that they state! Fsck, don’t even get me started here...
Why don’t any of these people intervene when the little people are being liquidated? For the matter, why do they design financial systems that are ridiculously unsafe—practically guaranteed to get people unexpectedly liquidated by design?
I think they want to protect SOL. Because they are SOL holders.
I also wonder who this whale is—and if any of the planned OTC trades could have better results for the whale than onchain liquidations.
Seizure of user funds is not necessarily adverse to the user—it could be collusive, to give one user special treatment. Liquidations are
extremely destructive to the assets of the little people. This is my speculation—just suddenly wondering...
The whale is not closing their position.
Poll
