Users of DeFi app Solend block attempt to take over ‘whale’ account

The logo of cryptocurrency platform Solana.

Jakub Porzycki | NurPhoto via | Getty Images

Decentralized finance platforms are going to extreme lengths to limit the fallout from a sell-off in cryptocurrencies.

Solend, a lending platform built on the Solana blockchain, tried to gain control of its largest account, a so-called “whale” investor that it said could significantly influence market movements.

Solend’s users have since voted to block the move.

What is Solend?

Solend is a DeFi app that lets users borrow and lend funds without having to go through intermediaries.

Solend said a single whale is sitting on an “extremely large margin position,” potentially putting the protocol and its users at risk. “In the worst case, Solend could end up with bad debt,” the firm said. “This could cause chaos, putting a strain on the Solana network.”

The account concerned had deposited 5.7 million sol tokens into Solend, accounting for more than 95% of deposits. Against that, it was borrowing $108 million in the stablecoins USDC and ether.

If sol’s price sank below $22.30, 20% of the account’s collateral about $21 million is at risk of being liquidated, Solend said. Sol was trading at a price of $34.49 on Monday.

On Sunday, Solend passed a proposal granting it emergency powers to take over the whale account, an unprecedented move in the DeFi world.

Solend said the measure would allow it to liquidate the whale’s assets via “over-the-counter” transactions as opposed to on-exchanges trades to avoid a possible cascade of liquidations.

DeFi apps under strain