Solana Hunts a Whale
Calm down, animal rights defenders, it’s not what you might think. Users of Solend — Solana-based borrowing and lending service — voted almost unanimously to grant Solend Labs the right to temporarily manage the “whale” account.
What kind of “whale” is this and why did it so excite Solend users? “Whales” in the industry are called holders of a large stake. In the case of Solend, the user (3oSE9CtGMQeAdtkm2U3ENhEpkFMfvrckJMA8QwVsuRbE) held about $170 million in his account. Such a huge amount, according to the Solend community and developers, could have an extremely strong impact on the market.
«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».
In order to solve the problem, the developers tried to contact ‘the whale’ both via Twitter and via on-chain message. But, contact could not be established. Therefore, developers had to take some action to avoid chaos in the market.
«Despite our efforts, we’ve been unable to get the whale to reduce their risk, or even get in contact with them. With the way things are trending with the whale’s unresponsiveness, it’s clear action must be taken to mitigate risk».
According to the situation, voting began with two options:
«Vote Yes: Enact special margin requirements for large whales that represent 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».
And the vast majority of Solend users chose the “Yes” option.
Thus, Solend users almost solidly granted Solend Labs the right to temporarily manage someone else’s account. Yes, the goal was good, but can we call it the right action from the point of view of decentralization? Think about it, and we will continue to observe.