The user at the center of the DeFi controversy at Solana lending protocol Solend began moving millions of dollars and decided to repay some of its debt.
Solend whale started moving funds
The anonymous wallet had deposited 95% of Solend’s pool of SOL tokens and represented 88% of USDC borrowing, but it was on the verge of a margin call last week as the SOL price fell more than 40% to as low as $27. If SOL reached $22.30, the protocol would have immediately liquidated up to 20% of the whale’s collateral, potentially causing harm to the larger Solana ecosystem.
In response to the concerns, the wallet transferred $25 million of its debt to Mango Markets, another lending protocol. The wallet’s moves occurred as the SOL price increased by 12% in 24 hours to $37. However, Solend indicated on Twitter that the recent move has not totally solved the problem and that they are still working on a solution.
3oSE…uRbE has acted on our suggestion to spread their position across lending venues (decentralized and centralized) as a first step.
So far they've moved $25M USDC debt to @mangomarkets
This shows commitment to working things out and solves Solend's USDC utilization problem.
— Solend (we're hiring!) (@solendprotocol) June 21, 2022
Solend came under fire after protocol developers proposed a governance vote to take control of the account and implement sufficient risk management measures. Due to the risks, the team recommended that the loan be settled through an over-the-counter (OTC) transaction rather than an on-chain liquidation.
Later, the governance proposal was heavily criticized on social media by observers who criticized the team for weakening DeFi’s decentralized principles. As a result, a new governance vote was held, and the previous proposal was declared invalid, with 99 percent of the votes supporting the new decision.