On Sunday, the decentralized finance (DeFi) sector came under re-scrutiny regarding one of the whale wallets of DeFi protocol Solend (SLND) at risk of liquidation.
This altcoin is not as decentralized as one might think
The proposal “SLND1: Reduce the Risk from the Whale” was launched abruptly without announcing on Sunday, and the vote closed with a 97 percent approval rating. As we reported on Kriptokoin.com, the scandal came just after the sudden layoffs of Coinbase and BlockFi last week and the liquidation debacle of Three Arrows Capital. In addition to the unexpected volatility and increased market sell-offs, the sudden changes of a so-called decentralized autonomous organization or DAO show that it is not as “decentralized” as altcoin users think.
The details of the offer include the whale’s wallet address and deeper information on why this account is causing problems for Solend (SLND). Part of the main problem is that the large account is facing liquidation which will put pressure on Solend and its users. According to the proposal, “If SOL drops to $22.30, the whale’s account becomes liquidable for up to 20 percent ($21 million) of its debts.” The intent of the offer is to take control of the whale’s account and settle it through an over-the-counter (OTC) transaction.
The DeFi industry may suffer greatly from these developments.
As always, there was a huge response from Twitter immediately. Arguments speak of the damage this move could cause to the overall picture of decentralized finance (DeFi). Taking control of one of Solend’s wallets calls into question the fundamental principles of DeFi. This move also has a negative impact on Solend’s ability to manage his debt. As Ava Labs founder and CEO Emin Gün Sirer pointed out, if the price of Solana (SOL) falls too low, the additional consequences of this move could bring gradual liquidations in the decentralized exchange (DEX) ledger.
Perhaps the problems in the cryptocurrency ecosystem are starting to reveal themselves through hastily made, rushed, forced and manipulated decisions. Arbitrary layoffs and breaking into DeFi wallets are far from the sacramental ideas that underline crypto’s decentralized culture, and such moves are likely to bring more criticism and trouble to the industry. In addition, the price of the altcoin project has fallen by about 3 percent in the last 24 hours. Solend (SLND) is currently trading at $0.653616. Solend price has seen huge drops in the last 30 days, seeing a loss of about 38 percent.
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