As CriptoFácil reported, decentralized lending protocol Solend voted to block funds from a major investor. However, the measure generated strong negative repercussions and led the network to take a new vote, which revoked the previous decision.
This Tuesday (21), the protocol opened a third vote, called SLND3, which provides for a series of limitations. The proposal is currently being voted on and provides for a limit of US$ 50 million for users to be able to borrow.
Limits to contain liquidations
According to the website, the third proposal focuses on putting a cap on the loan limit. This measure aims to reduce maximum liquidations and avoid problems like the one that occurred on Monday (20).
First, the new rule sets a maximum borrowing limit of $50 million. That is, the protocol will not be able to settle accounts that have more than this value. Investors who exceed this limit may have their accounts liquidated in the event of liquidity problems.
Initially, the loan limit per account starts at $120 million and will gradually be reduced to $50 million. Under the mechanism, Solend will implement a reduction of $500,000 per hour.
In this sense, the target investor of the controversial SLND2 proposal has US$ 100 million in Solend’s pools. Therefore, the investor would still have protection against liquidations, but would eventually fall into the limit rule.
Solend plans to limit settlement per transaction by a factor of 20. This means that the maximum settlement closing factor per transaction will be reduced from 20% to 1%.
Another aspect is the reduction of the SOL settlement penalty, which will drop from 5% to 2%. This will help reduce settlement spam.
The third voting proposal in Solend started on Tuesday morning and will last until 8 pm (Brasilia time).
According to the official voting site, the proposal has almost 480,000 votes. About 475 thousand (99.1%) vote in favor of the proposal, while only 4.2 thousand (0.9%) are against it.
“Solend is reaching out to market makers to help provide better on-chain liquidity. This combined with our proposals should reduce the market impact of DEX to a manageable level,” says the Solend team.
But as with the second poll, users identified a number of flaws. The main one was, again, the concentration of votes: a single entity accounted for more than 90% of votes in favour.
Thus, the decision on the fate of US$ 270 million in assets is in the hands of a few users. Once again, users complained about centralization in a protocol that was supposed to be “decentralized finance”.
Now Solend has more time to fix things. The SOL token price has stabilized at $35 and is preventing major sell-offs on Solend. However, if the market collapses and the SOL drops to $20, there could be major sell-offs.
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