How the community supports the decentralization of the network…

The terror of the total failure of the Terra Network is still deep. While the entire crypto space is struggling with falling prices, one or another network must fear for its survival. Lending protocols like Celsius, BlockFi, and Nexo have been hit particularly hard.

As the name suggests, the Solend platform is a decentralized lending platform on the Solana network. When it was also recently in danger of collapsing, SOL investors were very concerned. The concerns had triggered the realization that a Solana whale, which had 95 percent of the SOL tokens deposited in Solend in its wallet, was in danger of being liquidated. Not only would that have brought Solend to his knees, but it would also have put the multi-billion dollar SOL network in deep trouble.

Solana: $108 million loan poses record threat

Solana’s whale account had an outstanding loan of $108 million in USDC and USDT stablecoins on Solana’s lending protocol, Solend. The whale loan was in danger of being liquidated due to the drop in Solana’s price, which had meanwhile fallen to a low of US$28.54. With devastating consequences for Solend: if the US$21 million in Solana, which guaranteed the loan, had been paid off, SOL would hardly have been on the loan register.

To avoid this scenario, the co-founder of the “Rooter” network launched the SLND1 proposal. That would have ensured that Solana had taken control of the whale account and settled the collateral in an organized manner. An idea that went too far for most of the SOL community and raised questions about the decentralization of the network: the proposal was rejected.

Then yesterday, June 21, came the good news for Solend users when the protocol announced that the whale 25 million of its USDC debt moved to Mango Markets had: a competitive lending protocol. Some of Solend’s risk has been de-risked, but there is still $84 million in outstanding debt. It remains to be seen if a way will be found for the outstanding loan that allows Solend and Solana to get by without a hitch.

However, to avoid such a scenario in the future, the Solana community approved a proposal that limits the credit limit to US$50 million. The smart contract on which the protocol is based will also be adapted. If 20 percent of deposits in unsecured loans have been cleared to date, in the future it should only be 1 percent to relieve Solana’s network.