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The Solend landing platform team suggested that the community introduce special margin requirements for large users. The developers also requested temporary authorization to manage the whale account, which
The Solend landing platform team suggested that the community introduce special margin requirements for large users. The developers also requested temporary authorization to manage the whale account, which accounts for 95% of all deposits in Solana (SOL) and 86% of loans in USD Coin (USDC).
This offer aims to reduce the exposure of a user with a large margin position on Solend.
— Solend (we’re hiring!) (@solendprotocol) 19 June 2022
A copy of the offer is available here https://t.co/BlKRp7P83g
Earlier, the founder of Solend under the pseudonym Rooter said that one of the users has SOL of $170 million in deposits of the platform, as well as a debt position in stablecoins of $108 million. this contributor costs $22.27. At the time of writing, the cryptocurrency is trading around $30, according to CoinGecko.
3/ their liquidation cost is $22.27. We still have a ways to go, but we want to be prepared for the worst-case scenario.
— Rooter | Solend (hiring!) (@0xrooter) 18 June 2022
If the whale were to be liquidated, it would start with a partial liquidation capped at 20% (~$21 million) of outstanding debts.
“If the whale is liquidated, everything will start with a partial closure limited to 20% (about $21 million) of outstanding loans.”
Rooter explained that a position of this size can be traded “smoothly” in the OTC market, but the majority of Solend liquidators are bots that use the liquidity of decentralized exchanges. According to him, the situation could lead to a gradual price drop and endanger other platform participants.
“Solend has $20 million in reserves that can help pay off overdue debts, but in the worst case (we want to be prepared) it may not be enough,” the founder of the platform wrote.
Rooter emphasized that the Solend team tried to contact this major contributor, but was unsuccessful. Therefore, the developers decided to submit a proposal to the community, which should stabilize the situation.
1/ worst-case scenario, solend users lose $100M and all $20M of treasury is exhausted. This recommendation aims to prevent that.
— Rooter | Solend (hiring!) (@0xrooter) 19 June 2022
We’ve spent hours discussing different options, and to be honest, this seems like the best way forward.
it’s not up to us, it’s up to the DAO. https://t.co/MsMQ5Gw4vG
“In the worst case, Solen users will lose $100 million and all $20 million of treasury will be spent. This recommendation is aimed at preventing this. We spent hours discussing the various options, and to be honest, this seems like the best.”
The developers have proposed introducing special margin requirements for platform participants, which account for more than 20% of all Master Pool credits. They plan to set a special liquidation threshold of 35% for such players. It is assumed that the new rule will be applied by updating the smart contract.
The team also requested “emergency authorizations” to temporarily manage the whale’s account. They explained this by the need for a potential liquidation via the over-the-counter chart.
5.5 hours were given to vote on the proposal.
Problems arising from the liquidation of large market participants may not arise only in the Solana network. On June 18, analyst alias DeFiyst noticed a large debt position on the Aave protocol with an ETH liquidation price of $895.4.
🚨 Here we go again🚨
— DeFiyst (@DeFiyst) 18 June 2022
152k Ether 2% away from liquidation. https://t.co/UGQpueDdUc https://t.co/EAyf6kviHm pic.twitter.com/C89BTJ9bNL
Currently, the quotes have reached the specified value. However, the position was not forcibly closed as Aave only uses Chainlink USDT/ETH price prediction. Second, it assumes a 1% divergence threshold before updating the data, so the price has had time to rise.
At the time of writing, Ethereum is trading above $1,000.
However, not all players were so lucky. For example, on the Liquidity landing platform, 71,863 ETH liquidations were recorded on June 18 at a price of just over $927, according to Dune Analytics.
However, Celsius Network continues to reduce debt on Aave and has completely closed its position in LINK on the MakerDAO platform.
Amid the noise surrounding the Aave ETH whale waving on the verge of liquidation and the alarming approach of the inactive Solend user, @CelsiusNetwork they paid in full $LINK Producer position ($37 million).
— DeFiyst (@DeFiyst) 18 June 2022
Interesting.https://t.co/2MuuWEMJ9Y https://t.co/51rqJELZSZ pic.twitter.com/1DzPHHsN8w
Recall that Georgetown University law professor Adam Levitin described Celsius’ bankruptcy as almost inevitable.
Source: Fork Log
I’m Sandra Torres, a passionate journalist and content creator. My specialty lies in covering the latest gadgets, trends and tech news for Div Bracket. With over 5 years of experience as a professional writer, I have built up an impressive portfolio of published works that showcase my expertise in this field.
