95 percent of the SOL investments in the lending pool of Solend, a decentralized loan process on the Solana system, narrowly escaped being liquidated.
A huge account holder, or “whale,” who has an oversized presence on the loan protocol and is in control of the great majority of the SOL coins inside is at the core of the debate. The loan was secured by SOL, the native cryptocurrency of the Solana network, and was for $108 m worth of US Dollar Coin (USDC) and Tether (USDT). As SOL’s price plummeted to as low as $27 between Wednesday and Saturday of last week, the loan ran the risk of being liquidated.
Solana Passed USDC Debt To Mango Markets
Solend would have had nearly no SOL if the price of SOL had kept falling and the $21 million in SOL used as security for the loan had been liquidated. The co-founder of the project argued that the haste to acquire so much SOL for a discount may have caused the $2.6 billion Solana network to fail.
The whale borrower transferred $25 million in USDC debts to Mango Markets, another lending protocol located in Solana, the protocol said early on Tuesday, relieving some of Solend’s burden and lowering the protocol’s risk.
As a first step, 3oSE…uRbE has taken our advice and distributed its position among loan venues (decentralized and centralized). They have transferred $25M USDC debts to @mangomarkets thus far.
There were $247 million in assets trapped in the protocol as of Tuesday evening, and there was also $171 million worth of unpaid loans.
The market would have had difficulty absorbing the $21 million worth of SOL (or 20% of the collateral) that would have been immediately liquidated, which would have been terrible for Solend given the weakening prices at the time. With such low-interest rates, the lending procedure was at threat of losing practically all of its SOL lending pool.
Furthermore, according to the pseudonymous co-founder of Solend Rooter, the rush by liquidators to acquire the $21 million worth of SOL at fire-sale rates would have pushed the Solana network to the test.