Solana Lending Platform of Solend Initiates New Proposal to Limit Per Account Borrowing to $50M

Summary:

• The Solend team has initiated a proposal to introduce a per-account borrow limit of $50 million.
• The limit will be rolled out gradually, starting with the per-account borrow limit at $120 million and reducing it till $50 million is reached.
• Solend recently rolled back a proposal to take over a Solana whale account facing possible liquidation that could have affected the platform’s liquidity.
• The Solana whale is reportedly repaying the debt on Solend and taking out collateral.

The team at Solend has embarked on a new proposal to introduce a per-account borrow limit of $50 million.

According to the proposal, any debt above this limit will qualify for liquidation irrespective of the amount of collateral placed. In addition, the new limit will be introduced gradually, starting with a per-account limit of $120 million and reducing it gradually in steps of $500k per hour until the $50 million is reached.

The new proposal also intends to temporarily ‘reduce the maximum liquidation close factor from 20% to 1%’ to cap the amount that can be liquidated in a single transaction. It also proposes a temporary reduction in the liquidation penalty for Solana from 5% to 2% to ‘reduce liquidator spam while still being enough of a bonus for liquidators to break even on slippage.’

Solana Whale Situation Still Causing a Strain on Solend Users.

Concerning motivation for the new proposal, the Solend team explained that the Solana whale situation is still causing a heavy strain on the platform’s users. As a result, users cannot withdraw USDC, nor can positions collateralized by USDC be liquidation. Consequently, there is still a systemic risk to Solend.

They added:

Solend is reaching out to market makers to help provide better on-chain liquidity. This combined with our proposals should reduce DEX market impact to a manageable level.

If approved, the proposal will take effect as soon as possible. Due to the need to move quickly, consider the 24 hour voting period as notice for users to reduce their borrow positions.

Solend will be in contact with liquidators to modify their bots to account for these changes.

Solana Whale Has Reportedly Started Repaying Debt on Solend.

This third proposal by the Solend Team follows the events earlier highlighted of a Solana whale that had a large-enough position facing liquidation on the platform, which could have affected its liquidity.

The first proposal, which passed, granted the Solend team emergency powers over the account and figure out a balanced way of liquidating it. However, a second proposal was soon introduced to negate the first after the Solana and crypto communities voiced concerns over such a takeover.

According to the team at WuBlockchain, the Solana whale on Solend has since started repaying back debt and taking out collateral. A total of 24 million USDC has thus far been repaid, as highlighted in the following tweet.

The whale (3oSE…) is repaying the debt on Solend and taking out the collateral. A total of 24m USDC have been repaid today. The address currently has 4,501,945.77SOL collateral and 84,319,446.69 USDC+USDT debt positions. https://t.co/Hb4qRM07AQ

— Wu Blockchain (@WuBlockchain) June 21, 2022