Sunday, users of the Solana-based borrowing and lending service Solend voted to demand a takeover of the protocol’s most extensive account: a whale whose very high margin position was perilously near to a catastrophic on-chain liquidation cliff.
The governance vote, Solend‘s first, will provide Solend Labs with emergency powers to liquidate the whale’s vulnerable assets (approximately $20 million in SOL) via over-the-counter (OTC) trades rather than decentralized exchanges. It was where decentralized finance (DeFi) liquidations typically occur if the SOL price declines too sharply.
Solana DeFi platform votes to manage whale accounts. Image: CoinCulture
According to Solend Labs, the on-chain liquidation of the whale’s position may generate pandemonium in Solana’s DeFi markets, which the over-the-counter service can prevent. It also wholly supplants the smart contract–coded process that Solend follows programmatically for every other borrower liquidation.
Proponents of intervention noted that the Solend whale was not an example of a regular user. The account has deposited 5,7 million SOL on Solend, accounting for over 95% of the pool’s deposits. In contrast, it had borrowed $108 million in stablecoins, far more than anybody else.
If the $22.30 SOL liquidation price were reached, it would be responsible for around $20 million. Currently, SOL is trading at $32.27.
“Despite our efforts, we’ve been unable to get the whale to reduce their risk, or even get in contact with them,” the proposal said. “With the way things are trending with the whale’s unresponsiveness, it’s clear action must be taken to mitigate risk.”
The proposal posed the following question to token holders:
Vote Yes: Enact special margin requirements for large whales representing over 20% of borrows and grant emergency power to Solend Labs to temporarily take over the whale’s account so the liquidation can be executed OTC.
Vote No: Do nothing.
