On 19 June 2022, Solana-based DeFi app Solend initiated a voting proposal [SLND1] to mitigate on-chain liquidation risk from a whale having a tremendous margin position.
As per the initial blog post, efforts to contact the largest holder went unanswered, which is why they voted to temporarily take over the big HODler’s wallet till it reaches a safe level.
The voting would grant Solend Labs complete autonomy to liquidate the whale’s position which has nearly $21 million in SOL, through the Over-the-Counter [OTC] route instead of the usual DEXes, in case the token drops to $22.30.
The proposal received overwhelming support with 97% responding YES and 2.5% voting NO. Solend Labs then informed that the special margin requirements for accounts that represent over 20% of borrows have now gone into effect.
Immediately after the proposal was passed, criticisms began to mount over the “forced takeover” questioning whether the platform is truly decentralized. There were also discussions over how the voting was hastily arranged and lasted only a day.
Some posted screenshots where it showed one user with 1,014,210 votes alone. Another quipped,
“VCs, insiders, etc hold the overwhelming majority of wealth in the Solana ecosystem due to the initial token distribution, so it isn’t a surprise that the solend protocol vote passed.”
Solend Proposes To Revoke Previous Voting
Amidst the growing clamor, Solend finally responded with a fresh plan to nullify the earlier proposal [SLND1], increase the voting duration, and bring a new one that does not involve emergency powers to take over an account.
“The price of SOL has been steadily increasing, buying us some time to gather more feedback and consider alternatives”, the platform wrote in its latest blog.
Urging the community to be active for the next few days, the borrowing and lending platform stated,
“We recognize that a voting time of 1 day is still short, but we need to act swiftly to address the systemic risk and the fact that normal users can’t withdraw USDC. We ask our community to be active in governance in the next few days. Voting time will be revisited in a future proposal.”
“We’re committed to protecting user funds, transparency, and doing what’s right”, it added.