Solana DeFi controversy: Project wants to take over wallet

Solana (SOL) is again the subject of some controversy in the crypto news. It Decentralized Finance (DeFi) project Solend, which runs on Solana, stated yesterday to take over a wallet from a solana whale to prevent the collapse of Solend. This plan was immediately met with great criticism.

Solana project wants to take over whale wallet

Solend has faced a huge whale that is in danger of being liquidated if the price of solana falls below $22.30. A liquidation is the forced closure of a position because the collateral no longer covers the position.

According to the Solend team, this would cause enormous problems for the project, partly because there is not enough liquidity on the platform to carry out the liquidation. Therefore, the team submitted proposal “SLND1: Reducing the risk of whales”.

The proposal would allow Solend to take control of the wallet to manually execute the liquidation through a over the counter (OTC) transaction. This plan could of course count on a huge amount of criticism as it goes directly against what crypto stands for.

‘Bad idea from Solend team’

The community therefore expresses itself mainly negatively. Hous, a Twitter user, explains different reasons for why this is a bad idea. First:

“Allowing a company to take over users’ wallets to liquidate them is against the principles of decentralization and self-sovereignty on which DeFi is built.”

And:

“It would be an extremely bad PR move. DeFi is still in its infancy and it is vital that protocols maintain a good reputation.”

In short, it would be a bad move not only for the Solana ecosystem, but also for DeFi in general.

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Solend backs out

The criticism has now also reached the team behind Solend. And they have reneged on their proposal, reports Chinese crypto journalist Colin Wu:

“We have listened to your criticism of SLND1 and are proposing SLND2 to invalidate the latest proposal and work on a new proposal without emergency powers to take over an account.”

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