Solana Lending Platform Running a Governance to Take Over a Whale Account

[vv181]

TLDR;

There is some whale that has an enormous margin position that if it got liquidated, it will make a cascade of bad effect on Solana and their platform. So they are taking over the whale account/wallet/funds!

SLND1: Mitigate Risk From Whale
Succeeded

Dear Solend community,

As you may know, the largest user on Solend (3oSE9CtGMQeAdtkm2U3ENhEpkFMfvrckJMA8QwVsuRbE) has an extremely large margin position that is putting Solend protocol and its users at risk. Here are details about the user at the time of writing:

    5.7M SOL deposited ($170M)
    108M USDC and USDT borrowed
    25% of TVL
    95% of SOL deposits (Main Pool)
    88% of USDC borrows (Main Pool)
    A liquidation price of $22.30
    The last on-chain activity from the whale was 12 days ago

This is causing issues on the platform:

If SOL drops to $22.30, the whale's account becomes liquidatable for up to 20% of their borrows (~$21M). It'd be difficult for the market to absorb such an impact since liquidators generally market sell on DEXes. In the worst case, Solend could end up with bad debt. This could cause chaos, putting a strain on the Solana network. Liquidators would be especially active and spamming the liquidate function, which has been known to be a factor causing Solana to go down in the past. Due to concerns about risk, many users have withdrawn, causing USDC and USDT utilization in the Main Pool to spike to 100%. This means depositors can't withdraw, and positions collateralized by USDC or USDT can't be liquidated.

~snip~

Any action we take (including inaction) has a set of trade offs to consider. There is no perfect solution. With that in mind, the action we believe would result in the best outcome is as follows:

    Enact special margin requirements for large whales that represent over 20% of borrows. If a user's borrows amount to over 20% of all borrows for the Main Pool, a special liquidation threshold of 35% is required. This policy will go into effect upon approval of the proposal.

    Grant emergency power to Solend Labs to temporarily take over the whale's account so the liquidation can be executed OTC and avoid pushing Solana to its limits. This would be done via a smart contract upgrade. Emergency powers will be revoked once the whale's account reaches a safe level.

Apparently, the so-called decentralized protocol is not quite decentralized at all, don't you think?

And yes, the governance already passed, with 97.5% of the platform users are agreed to take over the account.

Source:
https://realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxPMnXJUZ1Hn/proposal/HuaL6cDtuNtfnJgvwMnYiZDHVCoLAuDtVFgJD8kYChJ4
https://www.reddit.com/r/solana/comments/vftt63/170_million_borrow_on_solana_is_close_to/
https://www.reddit.com/r/defi/comments/vftrm4/170_million_borrow_on_solana_is_close_to/

[1714465939]

1714465939

[1714465939]

1714465939

[CuriousGeorge]

Apparently, the so-called decentralized protocol is not quite decentralized at all, don't you think?

And yes, the governance already passed, with 97.5% of the platform users are agreed to take over the account.

They are still calling it as emergency power which was really weird for me. It's like as a dictator and exploiting the power of the developers. Basically, this is a robbery for the whale and decentralized was only a thing to fool people to put their liquidity on this fake finance platform.
This is pretty much the same like celcius which has been going so deep. It's the developer's fault to not give a cap for the lending option on the platform.

[vv181]

Apparently, the so-called decentralized protocol is not quite decentralized at all, don't you think?

And yes, the governance already passed, with 97.5% of the platform users are agreed to take over the account.

They are still calling it as emergency power which was really weird for me. It's like as a dictator and exploiting the power of the developers. Basically, this is a robbery for the whale and decentralized was only a thing to fool people to put their liquidity on this fake finance platform.
This is pretty much the same like celcius which has been going so deep. It's the developer's fault to not give a cap for the lending option on the platform.

The Solend Labs initiated the governance, and as do the majority of the community also agreed. Look like there isn't any dictatorial thing to me, it is just purely a bunch of masses who favour their own benefit.

And yep, the term emergency seems also quite funny, there is no such thing as an emergency while building on top of a fragile and centralized platforms.