DAO platform Solend cancels previous vote on access to funds of a large user

The Decentralized Autonomous Organization (DAO) managing Solend, a money market platform on the Solana blockchain, has canceled a previous vote that would have allowed it access to the wallet of a large whale by conducting an over-the-counter (OTC) liquidation, thereby preventing a cascading liquidation that could seriously jeopardize the market.

The whale in question is the largest user of the platform, having deposited 5.7 million SOL tokens, which constitutes over 95 percent of all Solend deposits, in order to borrow approximately 108 million dollars worth of USDC and USDT stablecoins.

According to Solend, if Solana falls to 22.30 dollars, the user would risk liquidation of up to 20 percent of the borrowed funds, or about 21 million dollars.

– The market would find it difficult to absorb such an impact since liquidators generally sell on DEXs. In the worst-case scenario, Solend could end up with bad debt – stated the Solend team, giving its users only six hours to vote on the proposal they would undertake.

The platform also claimed it was unable to compel the whale to reduce risk or even to contact him.

– Given the current state of affairs, it is clear that measures must be taken to mitigate risk – reads the initial proposal.

Community Discontent

Although the initial vote was adopted, it faced sharp reactions from members of the crypto community. Chief Counsel of Delphi Labs Gabriel Shapiro accused Solend of setting a bad precedent that is not only contrary to DeFi ethics in every respect but also illegal.

By Monday, Solend had asked users to vote on a new proposal to annul the previous elections, which garnered a convincing 99.8 percent in favor.

– We have listened to your criticisms regarding the SLND1 proposal and the manner in which it was conducted. The price of SOL is rising, giving us a little time to gather more feedback and consider alternatives – wrote the co-founder of Solend in a blog post.

The new voting also extended the voting period to one day, while the Solend team is expected to present a new proposal that does not include extraordinary powers over the wallet’s funds.

SOL, the native token of the Solana blockchain, is currently trading at just over 36 dollars, which is nearly 12 percent higher in the last 24 hours.