Solend has finally confirmed in a tweet that the crypto whale that posed a liquidation scare and governance risk on the decentralized finance (DeFi) platform has started moving assets. A screenshot taken by Solend's account of the activities on the whale's wallet revealed this detail.
Whale's Move Mitigates the Risk of a Wider Market Collapse on Solend
According to some reports, this development is beneficial in preventing the risk of a broader market collapse. This is because it alleviates the possibility of million-dollar losses if a liquidation event happens.
3oSE...uRbE has started moving funds https://t.co/QuoOMtDH02 pic.twitter.com/BBOz04iU5i
— Solend (@solendprotocol) June 21, 2022
Recent reports indicate that the whale locked Solana (SOL) tokens in Solend's liquidity pool, dominating it by 95% and garnering around 88% of all USD Coin (USDC) loans. The hold of the whale on the pool created huge amounts of risks, prompting the Solend community to gather and vote for the approval of a wallet take-over.
The assumption of the community that a liquidation event might be likely is further solidified by the persistent crypto bloodbath that has been going on for a few weeks already. The position held by the whale became close to its liquidation price as SOL's price shed 40% recently for the last few weeks.
Why Did Solend End Up Voting For A Take-Over?
Reports also add that liquidation of about 20% of the whale's collateral on Solend could have already happened had SOL plunged deeper to a $22.30 mark price. It is an over-leveraged position that could put the whole protocol and its users at risk, says the proposal from the Solend community as they called for a grant of "emergency powers" to take over the wallet.
The recent activity from the whale's account is considered by many a welcome development. This is also because most of Solend's community has been trying to get in touch with the owner of the large wallet account, going as far as broadcasting on-chain messages just to alert the holder. Such factors pushed the community to provide a majority-level approval for the radical measure proposed, garnering as much as 97% of the votes in favor of a take-over.
Fortunately for the whale, Solend's governance community has decided to overturn their governance vote for a take-over. Reports show that the move to take over even drew the ire of the crypto community. It is because, according to some members, such a radical measure creates a bad precedent that could affect large wallet holders, especially during extreme market conditions amid the backdrop of price volatility.
Extreme Market Conditions, Investor Panic, and Crypto Market Recovery
Moreover, the price of most cryptocurrencies has begun a moment of recovery. This includes SOL's return to a safer price point of $38 as of this writing. The whole crypto market capitalization has also returned to $939 billion, indicating some signs of recovery amidst the threats of a market crash.
As many may remember, panic and fear gripped the crypto market when Celsius and Luna showed signs of collapse. The anxiety-stricken market might need a lot more time to recover psychologically.
Read Also: Solana Community Takes Over Whale's Assets
