Solend Labs, a “decentralized” borrowing and lending protocol on Solana, votes to take over an account that deposited 5.7M SOL, over 95% of the pool's deposits
Solend users voted to “grant emergency power to Solend Labs to temporarily take over the whale's account.”
CoinDeskDanny Nelson
Context & Ripple Effects
Solend’s emergency vote puts a concentration problem at the center of its governance model: one account supplied more than 95% of the pool’s deposits, while Solend Labs sought authority to intervene. The decision was not durable; related coverage records a subsequent reversal of the DAO action, underscoring the conflict between protocol rules and discretionary risk management.
First-order effects
Solend Labs receives temporary authority over the whale account, displacing the depositor’s direct control to manage the pool’s concentrated exposure.
Solend lenders and borrowers are immediately subject to a governance decision in which a vote can alter control of collateral held in the protocol.
Second-order effects
The reversal forces Solend to distinguish emergency risk controls from its decentralized-governance claims, while users must price in the possibility that exceptional votes can override account autonomy.
For Solana DeFi participants, the episode makes deposit concentration a practical governance risk alongside the network instability previously reported in Solana’s outage-related disruption.
Third-order effects
If protocols address concentrated positions through ad hoc account takeovers, DeFi governance shifts toward a hybrid structure: token-holder votes provide legitimacy while core teams retain crisis-management power.
The lasting competitive question is whether lending protocols can reduce concentration risk through their design rather than relying on exceptional interventions that weaken the premise of user-controlled accounts.
The trend: DeFi lending is confronting the gap between decentralized governance in normal conditions and discretionary control when a single account creates system-level risk.
Awesome proposal and props to the Solend team for moving closer and closer to total decentralisation Ironically, the whale could wake up and vote no. That's how decentralisation works Code is not law; we make the laws together https://twitter.com/...
@coop_daniels
Cooper Daniels on x
“A single yea voter made all the difference: Their account was the only reason the proposal cleared the 1% mark.” Laughable. I get it. There are some cool NFTs on $SOL but Beta has FAILED. Cut bait and come to #Algorand $ALGO https://fortune.com/...
@lloydmiller
@lloydmiller on x
Well that's not very “decentralized” of them. https://twitter.com/...
@austinj
Austin Johnsen on x
Lol, 95%?! They basically did the crypto equivalent of “nationalizing” this whale account? https://twitter.com/...
@kentoinami
@kentoinami on x
I think this is the way to go. It's better to survive than to preach decentralization and blow up. https://twitter.com/... https://twitter.com/... https://twitter.com/...
@solendprotocol
Solend on x
@cobie We encourage you to read the proposal in its entirety before making a judgement. The whale is 95% of SOL deposits and 88% of USDC borrows, and is paying >60% APY to borrow but still hasn't repaid. Unfortunately there is no perfect solution. https://blog.solend.fi/...
@algofamily
Michael Jordan on x
Now $SOL users have to deal with “decentralized” exchanges taking control of wallets to prevent more downtime of #Solana network? Hopefully after #Ethereum, #Luna, #Celsius, #TRON, more people will build the future of finance on solid technology. $algo https://blog.solend.fi/... …
@arrington
Michael Arrington on x
“DeFi” https://twitter.com/...
@swenlink
PabloPicasso on x
Dilemma Situation that might repeat on other L2s TVL flow: L2 Protocols -> More robust ETH Protocols e.g.: SOLEND TVL -> AAVE/COMP TVL https://twitter.com/...
@kennwhite
Kenn White on x
“[You] grant emergency power to...take over the whale's account so liquidation can be executed OTC & avoid pushing Solana to its limits. This would be done via a smart contract upgrade. Emergency powers will be revoked once the account reaches a safe level” https://blog.solend.fi…
@lex_node
@lex_node on x
is the solend upgrade function governance-gated or are devs just looking for governance to bless an upgrade the devs have the power to effect anyway? https://twitter.com/...
@larry0x
Larry on x
Solend governance discussing taking over a whale account 🤯 https://twitter.com/...
@erratarob
Robᵉʳᵗ Graham on x
The most important concept you need to learn about DeFi (Decentralized Finance) is that it's neither decentralized nor finance. https://twitter.com/...
@johnalanwoods
John Woods on x
The sweet irony that there is a “vote” on Solana to seize user funds to avoid a liquidation event. 🤡 Bear markets are nature's way of purging dogshit like this. https://www.coindesk.com/...
@aaronwise5147
Aaron Wise on x
Solana-based Solend DAO just passed its first governance proposal. The “proposal” passed: 1,155,431 aye, 30,101 nay. ONE PERSON voted 1 million of the ayes. #DecentralizationTheater
@nsapproductions
Nick Saponaro on x
It's not “DeFi” if this can happen. https://twitter.com/...
@thormaximalist
@thormaximalist on x
Damn if you do, damn if you don't. Damn for even considering it, I'l never use @solendprotocol. Altering deals as you go instead of having a good first principles based design is how you get rekt. https://twitter.com/...
@richayotte
@richayotte on x
This proposal aims at censoring an account for a *potential* risk. The antithesis of crypto. Might as well just use a traditional bank. https://twitter.com/...
@jgamblin
Jerry Gamblin on x
Wasnt *one* of the reasons to invest in cryptocurrency so someone couldn't just come in and seize all your assets? https://www.coindesk.com/...
@solendprotocol
Solend on x
In the meantime you can read the proposal here https://blog.solend.fi/...
@solendprotocol
Solend on x
This proposal aims to mitigate risk imposed by a user with a large margin position on Solend. A copy of the proposal is available here https://blog.solend.fi/...
@cdespinosa
Chris Espinosa on x
Decentralized Run On The Banks https://twitter.com/...
@fomoby
@fomoby on x
If you start losing the game just change the rules! https://twitter.com/...
@milimalism
Takisoul on x
Many comments below arguing this isn't decentralization. Yet, THIS is the power of decentralized governance! As @_Dean_Machine pointed out, the whale = governance holder may very well decide to vote no and end this. DAO Discussions & decisions w high stakes are fascinating 🔥 http…
@coindesk
@coindesk on x
Users of @solana DeFi platform @solendprotocol voted to “grant emergency power to Solend Labs to temporarily take over” a large account on the cusp of liquidation. @realDannyNelson reports https://www.coindesk.com/...
@swenlink
PabloPicasso on x
Translation: Voting Yes: REKTing the protocol via Givernance Voting No: Potentially REKTing the protocol with bad debt. https://twitter.com/...
@danny_mx
Danny on x
Solend Labs has a proposal to vote taking a whale's money that is on risk of liquidation that could cause damaging effects on Solana, they want to take the liquidation OTC. Solana is a joke, DeFi is a joke, web3 is a joke.