A crypto lending app attempted to capture a ‘whale’ account to prevent the system from collapsing

63 / 100

Cryptocurrency platform Solana logo.

Jacob Porziki | By Norfoto | Getty Images

Decentralized finance platforms are going to great lengths to limit sale-off results in cryptocurrencies.

Soland, a lending platform built on the Solana blockchain, sought to gain control of its largest account, a so-called “whale” investor, which it said could significantly affect market activity. .

Consumers in Soland have voted to stop the move.

What is Soland?

Soland is a Defi app that allows users to borrow and lend funds without intermediaries.

Soland said a single whale is sitting in a “very large marginal position”, potentially putting the protocol and its users at risk. “In the worst-case scenario, Soland could end up with bad debt,” the firm said. “It could cause chaos, and put pressure on the Solana network.”

There were 5.7 million deposits in the respective accounts sol Tokens in Soland, accounting for more than 95% of the deposit. In contrast, Stablecoin was borrowing $ 108 million from USDC and Ether.

If Soul’s price drops below $ 22.30, 20% of the account’s congenital – about $ 21 million – is in danger of being lost, Soland said. Seoul was trading at 34.49 on Monday.

On Sunday, Solend passed a resolution giving him emergency powers to seize the whale account, an unprecedented step in the defense world.

Soland said the measure would allow it to eliminate whale assets through “over-the-counter” transactions – as opposed to on-exchange trades – to avoid a potential liquidity cascade.

DeFi apps under stress

The move sparked a backlash on Twitter, with some questioning Soland’s decentralization. One of the key principles of Defi is that it means eliminating central institutions like banks.

By Monday, however, Soland’s consumers had been asked to vote on a new proposal to overturn the earlier vote. With 99.8% of the vote, “yes”, the overwhelming community voted in favor.

The defeat is a sign of how DeFi – a kind of “wild waste” where consumers take it upon themselves to trade and provide peer-to-peer loans – has fallen into the crypto recession.

MakerDAO, the maker of a dollar-pagged stablecoin called DAI, recently disabled a feature that allowed merchants to borrow against DAI. EtherA derivative token creates turmoil in the crypto market.

STETH is meant to be similar to ether, but it is trading at increasing discounts on the second-largest cryptocurrency. Getting in and out of STETH is not easy, and this results in liquidity problems for large crypto lenders and hedge funds such as Celsius and Three Arrows Capital.

Leave a Comment