The decentralized finance (DeFi) sector continues to churn as the overall market drop,remortgaging of assets and a high stakemargin transactions lead to the collapse of projects. In three months, the amount of funds blocked in DeFi has decreased by 64% to $57 billion, and new methods of rescue of individual platforms risk a complete loss of investor confidence in this direction.
Image source: defillama.com
This time, the Solend platform distinguished itself, whichis based on Solana, and whose total assets in April exceeded $800 million. Despite the declared decentralization and autonomy, the platform put to the vote a proposal to change the smart contract and expel the largest whale with the forced closing of positions on the OTC market.
According to management, the whale has blocked 5.7 millionSOL is predominantly in stablecoins for guaranteed annual returns. As the SOL declines, the amount of margin on the whale's positions falls. When the SOL reaches $22.3, the platform must liquidate the coins deposited by the whale - the so-called stop out.
Image Source: Cryptocurrency ExchangeStormGain
The problem is that developers don't wantcontact the sale of such a volume of SOL (at the time of liquidation, about $21 million) through its own platform. For Solend, these are additional risks due to lack of liquidity and fear of a collapse in SOL, which is the base coin. Therefore, on June 19, management, without prior announcement, invited the community to vote to change the smart contract to use the whale's account without permission and realize his deposit through over-the-counter (OTC) tables.
Due to the haste in voting, they barely managed to overcome the quorum of 1%, and 86% of the weight belongs to one address.
Image source: realms.today
Change smart contract to fixan emergency situation is not an isolated case. At one time, Vitalik Buterin initiated a hard fork of Ethereum due to a hacker attack on The DAO fund. However, many users regard such steps as an attempt on decentralization and the main postulate of the cryptocurrency world “code is law”.
Analytical group StormGain
(platform for trading, exchanging and storing cryptocurrency)
