CRYPTO NEWS

After community backlash, Solana-based Solend protocol withdraws decision to control whale account

  • Solend’s decision of enacting emergency powers to take control of whale accounts saw huge backlash. Community raised further questions about its “decentralization” while calling it an opaque process.
  • Solend floats a new proposal to terminate the previous one with Solana’s (SOL) rising price giving them a breather.

There have been major liquidity concerns emerging from the decentralized finance (DeFi) market in the crypto space. On Sunday, June 19, Solana-based lending platform Solend initiated an SLND1 proposal that would grant emergency powers to Solend Labs to temporarily take over control of whale accounts.

Solend said that the decision comes in order to mitigate liquidity risks as a Solend whale had an extremely huge margin position putting users at risk. Solend further justified its proposal noting:

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.

Solend said that the decision to execute emergency powers was to handle liquidation gracefully over-the-counter (OTC). The leading platform, Solend, is expected to control slippage at 3 percent with this move against 46 percent on the DEX platform.

Solend faces huge community Backlash

Although the proposal received 97.5 percent votes in favor, there was a huge community backlash for a “decentralized” protocol to execute such emergency powers. Dylan LeClair, senior analyst at UXTO wrote:

Absolute comedy. @solendprotocol, a supposed “decentralized” lending protocol built on Solana has “voted” to take over a whales account with emergency powers to eliminate the chance of forced liquidation. “Decentralized” in name only.

Evan Van Ness, founder of @WeekInEthNews said: “Sqlana’s Solend leverage platform just spun up a fake vote as cover to control a whale’s account so that it wouldn’t get liquidated & crash the $SOL server again. Solend is an official portfolio company of Solana. Insider deals. Central servers. This is the definition of CeFi. Bailouts for insiders through a sham and opaque political process”.

Solend initiates corrective measures

Soon after a major community backlash, Solend knew it was time to do the damage repair. Furthermore, the SOL price has jumped past $32 for now as part of the broader market recovery. This gives some time for Solend to pay attention to the feedback.

Thus, to invalidate the previous proposal SLND1, Solend has initiated a new proposal SLND2. The announcement notes:

We’ve been listening to your criticisms about SLND1 and the way in which it was conducted. The price of SOL has been steadily increasing, buying us some time to gather more feedback and consider alternatives. We recognize that a voting time of 1 day is still short, but we need to act swiftly to address the systemic risk and fact that normal users can’t withdraw USDC.

Solend further assured that it is committed to protecting users’ funds. It also assured the community about absolute transparency in the matter.

Der Beitrag After community backlash, Solana-based Solend protocol withdraws decision to control whale account erschien zuerst auf Crypto News Flash.

Institutional Interest in Shorting Bitcoin Rises to Record Levels in US (Report)

Exposure to shorting Bitcoin’s price saw record inflows of $51 million last week as the asset crumbled below $20,000, a new report showed. Shorting Dominates in the US According to the latest CoinShares’ weekly ‘Digital Asset Fund Flows’ report, a total of $64 million in inflows in the digital asset investment products was observed between::Listen

Exposure to shorting Bitcoin’s price saw record inflows of $51 million last week as the asset crumbled below $20,000, a new report showed.

Shorting Dominates in the US

According to the latest CoinShares’ weekly ‘Digital Asset Fund Flows’ report, a total of $64 million in inflows in the digital asset investment products was observed between June 27 and July 1, and a major chunk of 80% went into shorting Bitcoin investment products.

The interest in shorting comes as Bitcoin posted the worst quarterly performance in a decade. A gloomy macro forecast, looming recession fears, and high-profile crypto firms struggling with the impact of the sell-off have all contributed to the bearish sentiment.

As a result, the US accounted for $46.2 million of inflows. The recently launched ProShares Short Bitcoin Strategy ETF, a fund that tracks bets against the price of Bitcoin alone, loaded up more than $43 million worth of inflows over the past week.

CoinShares noted that the accessibility of ProShares’ BITI offering shorting exposure via futures contracts for investors mulling a bet against Bitcoin had driven the current figures.

“This highlights investors are adding to long positions at current prices, with the inflows into short-Bitcoin possibly due to first-time accessibility in the US rather than renewed negative sentiment.”

Other than the US, inflows in long positions on Bitcoin were seen in Brazil, Canada, Germany, and Switzerland, which totaled $20 million.

The increase in short Bitcoin funds comes a week after CoinShares’ reported the largest ever digital asset products outflows that reached an astonishing record-high of $423 million. Bitcoin products saw net outflows worth $453 million during this time.

Diversification Has Begun

Investors are also beginning to diversify as inflows of several altcoins such as Solana, Polkadot, and Cardano’s totaled $1 million, $0.7 million, and $0.6 million, respectively. Ethereum also managed to finally break the 11 weeks of outflows by snapping up $5 million in inflows in the past week.

Furthermore, multi-asset investment products managed to float relatively smoothly despite the crypto carnage in the weeks prior. The report suggested that this cohort of products was least affected by the negative sentiments of the crypto winter and saw inflows worth $4.4 million while recording minor outflows only two weeks of this year.

After community backlash, Solana-based Solend protocol withdraws decision to control whale account

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