If Solend cannot take over the account, some have confidence that it could cause a collapse, which will drive Solana’s price to zero.
Solend, the Solana-based decentralized finance (DeFi) lending protocol, has caused another governance vote to invalidate the recently-approved proposal that gives Solend Labs “emergency powers” to access a whale’s wallet to avoid liquidation.
The governance vote titled “SLND1 : Mitigate Risk From Whale,” launched on Sunday by the crypto lending platform. This allows Solend to decrease the risk that the whale’s liquidation poses to the market by letting the lending platform access the whale’s wallet and letting the liquidations happen over-the-counter (OTC).
According to Solend, if Solana drops in price and the whale gets liquidated, the lending platform may “end up with bad debt” and strain the Solana network. Triggering the criticism from the community members, the proposal was approved.
The community called it the opposite of what DeFi should be and condemned the move by saying that it was outright illegal, so the Solend team initiated a second governance proposal vote to invalidate the previously-approved proposal. The proposal ended with 1,480,264 votes in favor of ignoring the SLND1 proposal.
The new proposal invalidates the previous vote and will push Solend to find another solution that does not involve compulsorily taking over an account. In addition, it also increases the governance voting time to 1 day.
The situation has put the crypto lending platform into a horrible dilemma. If Solend prospers at taking over the whale’s wallet and being granted emergency powers, it may save SOL from a DeFi implosion. Though, this will show that anyone’s assets can be confiscated within the platform and can cause a boycott.
On the other hand, if the Solend team cannot alleviate the risks surrounding the whale’s account, some are confident that it can trigger a Solana meltdown, causing SOL’s price to drop heavily.
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