Solend users have decided to control the possible liquidation of a significant investor in the lending platform DeFi. According to the vote that took place recently, Solend Labs will have full autonomy to decide how the Whale will have its crypto assets liquidated in case it fails to meet the margin call.
Solend was developed through the Solana network, and the investor’s liquidation could cause a new collapse in the crypto market. The Whale owns 95% of the Solanas stored on the platform.
Solana’s platform lent US$108 million
Focused on crypto assets backed loans, the platform may face instability if the large investor is liquidated. In total, he borrowed US$108 million from Solend.
The Whale received US$108 million in stablecoins and deposited 5.7 million units of Solend on the platform. But with the price of the altcoin facing major devaluation in 2022, the margin call for the investor is approaching the time of liquidation.
Currently, each unit of Solana is priced at US$38.57 on the market, according to data from CoinMarketCap. If the price of the crypto asset continues to depreciate to US$22.30, about US$20 million of the Whale could be liquidated.
Solend stated on its blog that it tried to contact the prominent investor. However, Whale did not respond to the platform’s statement, which called for the user to reduce the loan risk with new funding.
Solend’s communiqué called on the other users of the lending platform for a vote. Most of them decided Solend Labs should control the large investor’s liquidation.
Thus, instead of liquidating the Whale by offering Solana on decentralized exchanges (DEX), the large investor can be liquidated in over-the-counter (OTC) trading.
In other words, instead of dumping a large volume of Solana on the market in a possible Whale’s liquidation, Solend Labs will sell the crypto assets in another type of trading.