Solana Based Lending Protocol Voting To Mitigate Risk From Whale
Solend is a Solana-based lending protocol with a decentralized autonomous organization (DAO). DAOs allow users to vote on proposals to help determine the future of the protocol.
The first governance proposal voted to mitigate liquidity risks brought by a single whale account. The account in question has about 5.7M SOL deposited, borrowing around $108M in USDC and USDT. This single account makes up 95% of SOL deposits in the main pool and 88% of USDC borrows from the main pool.
The account becomes liquidatable for up to 20% of their borrows ($21M) should the price of SOL drop to $22.30. Due to these concerns, many users withdrew, causing stuck positions and disabling other depositors from withdrawing.
Solend has been attempting to get in touch with the whale since June 13 through on-chain messages and Twitter posts. It is also important to note that the account hasn’t had any on-chain activity for over a week. Due to the unresponsiveness and potential risk, a vote was proposed.
While the proposal did initially pass, another proposal was passed to invalidate the former and increase voting time. The initial proposal would have given Solend Labs emergency power to temporarily take over the whale’s account to handle the liquidation OTC (Over the counter) to avoid pushing Solana to its limits. The emergency powers would have been revoked after the account reached safe levels. This first proposal vote revealed that a single account cast over 1 million votes for the affirmative. The yes votes consisted of 1.155 million votes, around 97.55% of all votes.
The second proposal SLND2 invalidated SLND1 and increased voting time after public outroar over the first proposal ending in 6 hours with a vote from a whale account. Some speculate that the account is controlled by Solana and was therefore centralizing the voting process in an attempt to quickly resolve the issue. The second proposal passed to invalidate the first with 1.48 million votes (99.8%) in favor, and a new proposal is in the works- one that will not involve emergency powers granting control over the account.
