Solend seized $170M of user funds

https://old.reddit.com/r/CryptoCurrency/comments/vfszpt/solend_the_largest_lending_market_on_solana_is/

by 55555 • 4 years ago

283 213 4 years ago

old.reddit.com

If you want a non-Reddit summary: https://web3isgoinggreat.com/?id=solend-dao-passes-proposal-...

DantesKite• 4 years ago

Thank you. Following all these events has been difficult and having a place that provides context for each of these events is so useful.

moralestapia2• 4 years ago

"The proposal elicited strongly negative reactions from many in the crypto community, who feel that a project taking over a user's account flies in the face of the concept of defi and sets a dangerous precedent."

LOL

555555• 4 years ago

There is some more analysis/coverage here: https://twitter.com/FatManTerra

The Solend team just confirmed to me that when this change is implemented, the whale will instantly be partially liquidated down to a safer ratio. SOL is $32 but his current liquidation price is only $22. On the fence about the main proposal, but I do not agree with this part.

This is messed up.

Kiro• 4 years ago

Readable link on mobile: https://www.reddit.com/r/CryptoCurrency/comments/vfszpt/sole...

mminer237• 4 years ago

New reddit's even worse. Here's the better mobile version: https://i.reddit.com/r/CryptoCurrency/comments/vfszpt/solend...

baq• 4 years ago

defi at its best. zero upside of centralized finance with all the downsides, after all.

Melting_Harps2• 4 years ago

defi at its best. zero upside of centralized finance with all the downsides, after all.

DeFi definitely over promised, and under delivered: the part that I take issue with is why build these tools on centralized alt currencies? I mean if you think NFTs are the extent of DeFi (much of which is what web3 hinged on) than this was predictably going to fail just like the ICO craze did.

Smart contracts based on oracles are likely to be the real big advent, and I foresee it to be what Dorsey is proposing with now the absurd titled 'web5.' I just can't see why anyone would place this much trust in a PoS coin with a central governance and with major stake by VC in SV. The whole point was to get away from these gate-keepers, not allow them to have a major share of the coins in existence where they can, likely have, cornered the entire market.

Whatever, a purging was necessary: I hope this makes CONbase fold once and for all.

I just wish I had kept my cash and been able to take advantage of this major dip in BTC: I made major purchases back when we hit mid 30s (~50% of ATH) after liquidating some positions in late Nov.

scrlk2• 4 years ago

I just can't see why anyone would place this much trust in a PoS coin with a central governance and with major stake by VC in SV.

In a bullrun, no one cares about "decentralisation" or "fundamentals", they just want to make as much money as possible, even if it means interacting with CEXs/CeFi/centralised L1 scamchains etc.

Only when things go south do people understand why "decentralisation" is important.

colinsane3• 4 years ago

the part that I take issue with is why build these tools on centralized alt currencies?

because the decentralized cryptocurrencies are expensive to transact with — because many people, like you, strongly prefer to use the decentralized ones and so pay a premium to do so.

mirntyfirty• 4 years ago

I thought the whole point of crypto was to help the unbanked, save us from the evils of fiat, provide anonymous decentralized transparency that protected users, and serve as a hedge against inflation or market turmoil. /s

PragmaticPulp• 4 years ago

One of the themes in pro-crypto writings has been the idea that as long as you “do your own research” then the bad things won’t happen on your chosen cryptocurrency. The prevailing idea (among pro-crypto spaces) is that bad things only happen to other people who deserve them because they didn’t do the right research.

Recently we’re seeing the bad things happen in more and more mainstream chains. Even famous NFT proponents have been losing their NFTs to scams at a shocking rate. I wonder if this will drive people back to simpler chains like Bitcoin, or if we’re going to see enough bad things (including crashes) that it just sucks the enthusiasm out of the crypto space entirely.

tatertots12343• 4 years ago

Most of the things that cause these problems, like stolen apes, would not work on Bitcoin as it lacks smart contract functionality.

cowtools8• 4 years ago

Bitcoin has some scripting[0] functionality, and its non-fungibility[1][2] can facilitate NFT-like colored coins[3][4]

[0] https://en.bitcoin.it/wiki/Script

[1] https://en.bitcoin.it/wiki/Fungibility

[2] https://sethforprivacy.com/posts/fungibility-graveyard/

[3] https://en.wikipedia.org/wiki/Colored_Coins

[4] https://www.youtube.com/watch?v=889JSfIaPzs

3a2d294• 4 years ago

Not to be super “arm chair psychologist” about this, but I always thought the whole “you deserve it if you got scammed” mentality comes from the people that believe crypto will replace all modern finance.

For crypto to replace modern finance, it needs to be better in every way (so it’s a total replacement).

Decentralized currency is better for some things, worse for things like preventing scams. If modern finance prevents scams better, than crypto won’t replace it in that area at least.

Solution? Easy: scams aren’t a problem. Modern finance isn’t better in fixing that problem, cause it’s not a problem. Now crypto is once again better in every way.

douglaswlance• 4 years ago

it needs to be better in every way

It only needs to be better in enough ways to persuade enough people to adopt it such that it hits a tipping point and becomes the de facto standard.

rvz4• 4 years ago

The pro-crypto folks have created the delusion that 'crypto will replace all modern finance' and they will quickly realise that regulations will wipe out the majority of tokens and projects unable to comply with them; and a remaining few of them existing and surviving.

It also means the anti-crypto folks will also realise that destroying 'all of them' is another delusion that activists like the free software foundation for example who's mission is still to remove all non-free software in existence. After 37 years, its still here and it is co-existing with some open-source software.

The undeniable fact is that regulations will be put in place for crypto and only a surviving useful few will continue to co-exist with the current system which both the anti-crypto folks and pro-crypto maximalists will be disappointed in achieving their utopian ideals.

michaelt• 4 years ago

To be fair, "you deserve it if you got scammed" also plays well with the anti-crypto crowd.

A person pays the price of a house for NFTs of pictures of apes, gets tricked into giving them away to scammers, then buys them back from the scammers? Ha, what a fuckin' idiot.

itronitron• 4 years ago

From what I have read, crypto folk seem to claim primarily that the decentralized currency 'not be a scam' in contrast to a currency managed by a central bank. Whether or not the currency discourages or enables scams via the currency is a secondary concern. Of course, Solend's interference seems like something 'a central bank' might do.

wyager2• 4 years ago

For crypto to replace modern finance, it needs to be better in every way

I don't think this follows logically at all. Can you explain your thought process? (FWIW, I think that most likely the only component of finance that will be replaced by "crypto" [most likely just bitcoin] is the money and payments layer, so I probably agree with you in general.)

fny2• 4 years ago

Modern finance is much better at handling fraud. Insurance exists, and recourse also exists since anonymity is not a requirement.

Decentralized finance has thus far been demonstrably worse than everything in modern finance. It's illiquid, transaction costs are higher, full of scams, buggy, and recourseless.

The whole space needs to grow up fast.

alach11• 4 years ago

It's a form of just-world fallacy. It's comforting to think "bad things happen only to stupid people, and I'm not stupid."

https://en.wikipedia.org/wiki/Just-world_hypothesis

throw1231231232• 4 years ago

If modern finance prevents scams better,

Its better at preventing a type of scam, but significantly worse at legal scam -> how much is an 8% inflation of the dollar on dozens of trillions of USD denominated financial instruments?

And there is also plenty of equity scams that are sanctioned by government - the kind that suppresses the ability of people to invest or get funded, to give special permissions to those that play the rules, etc. The way some get bailouts at the expense of the rest.

A system with a high degree of freedom and lack of oversight will have higher scams. The big question is, if people were given the choice to participate in both systems, which one will thrive?

DougMellon• 4 years ago

Is it truly decentralized when it’s so reliant on exchanges and wallets that are abstracted away from the chains - often through third party layers akin to Infura?

cyanydeez• 4 years ago

Crypto doesn't exist without centralization. Sorry.

granddemolisher2• 4 years ago

I find it as absurd as anyone else.

The field is unfortunately rifled with people who are shills and religious believers. I have talked to a few VCs and technical people drilling down into the tech - I had better arguments than them for why someone would use the projects they funded or created.

jasonwatkinspdx• 4 years ago

Just last night the owner of the neighborhood convenience store was asking me to explain NFTs, as one of his other regulars was hyping them up earlier that day. This man has run his business for decades, understands commercial banking services, etc. I could not for the life of me fully convince them that with NFT's, "there's no there there." Like these things have been so hyped by so many people close enough to the main stream that the fomo style "those rich guys have to be onto something smart with this" assumption is incredibly hard to disprove. The closest I got was using beanie babies as an example.

TrackerFF• 4 years ago

DYOR = watching 10 min vids from influencers pumping up shitcoins, hanging around in various discord or telegram echo chambers, skimming through whitepapers you don't understand.

agumonkey• 4 years ago

Research is fuzzy word in this bubble. I've seen people crafting their own tiny metric: twitter liveness, github activity, size of source code, website quality. White paper reading (I skimmed through a few, it felt like marketing speach most of the time). It only feels solid for newbs who never designed a system or seen math above HS level.

diob• 4 years ago

This is a common life viewpoint in general.

Bad things happen to other people because they did something to deserve it. Good things happen to them because of luck.

Good things happen to me because I deserve it. Bad things happen to me because of bad luck.

cowtools8• 4 years ago

We're not talking about people getting struck by lightning here, we're talking about an intentionally built and voluntarily used computer system. If you don't understand the risk, don't invest.

rglover• 4 years ago

They say "do your own research" and then when you do and have questions about difficult to conceive (or seemingly irrational things) they belittle you, attack you, and—at least on Twitter—reply with snarky memes. As soon as I started investigating Ethereum, ERC-20 tokens, etc. at a technical level, I realized it was a house of cards of immense proportions.

The place that didn't happen? Bitcoin. There's not a lot of esotericism around Bitcoin (skim 1-2 books, listen to a couple of talks on YouTube, and generally speaking you "get it"). If you're genuinely interested, people are more than happy to help you and set you on the right path.

acover• 4 years ago

What's wrong with erc20 tokens?

Spartan22• 4 years ago

That's a straw man. Doing your own research doesn't guarantee protection against all scams or losses, it just increases it and scams and freezes are to be expected, that's why diversification and taking profits is key.

Very flawed argument.

yieldcrv8• 4 years ago

That's not the impression I get about this one action being discussed, but odd take.

There are a variety of amateurish and hysterical things about this Solend project. Why don't you just talk about that project?

Like, how the liquidation won't be that bad? Or how half a million dollars in Solend tokens gets to vote to seize $170m of funds? those things are hilarious.

SergeAx• 4 years ago

NFT is just an URL pointing to CDN (or even S3) stored on the ledger, how one can "lose" it?

wyager2• 4 years ago

Basically anyone I consider especially credible has been consistently saying "everything except bitcoin is overwhelmingly likely to be a scam", which has proven to be a fairly reliable heuristic. I think anyone who actually "DTOR" and has the brain power to interpret the results comes to a similar conclusion.

usrn• 4 years ago

These are tokens not crypto currencies. Please stop confusing them.

saurik2• 4 years ago

Solend is just some random lending market that I--despite being in this space full time--don't think I've ever heard of... supposedly it is similar to AAVE, but on Solana? Just because something happens "in more and more mainstream chains" is meaningless: the chain on which something is running is unrelated to whether it is a good idea or not. I want to be very clear about this: I highly doubt that any normal person CAN do enough research to safely manage loans or borrow and invest with leverage, which is what these lending platforms are for, but that doesn't mean that they are fundamentally broken or are scamming people.

physicsguy• 4 years ago

Like with normal investing, consumers do not have the ability to “do their own research” about the internals of companies who create and promote cryptocurrencies. Which means that the research is flawed.

cormacrelf• 4 years ago

This one was about the concentration of voting power. It turned out that a single, anonymous owner of governance tokens had enough votes to decide this hugely consequential issue on their own. Almost as if corporate shareholding concentration and acquisition-disclosure laws are as good as it gets for "decentralisation" of decision-making, and crypto is now going to have to reinvent that as well.

Like, there are literally already laws in many jurisdictions that prevent multiple apparently-independent parties conspiring to avoid jumping over ownership thresholds but nevertheless acquire a majority of a company. Have fun emulating that with pseudonymity, no central regulator and no law enforcement with jurisdiction everywhere the participants are!

flaque3• 4 years ago

The current headline "Solana just seized $170MM of user funds to prevent a decrease in Solana's price" is factually incorrect.

A project on Solana, called "Solend", froze $170m of funds deposited into its protocol.

"Solana" didn't seize the funds, nor was the purpose specifically to protect Solana's price.

555555• 4 years ago

Sorry, I misattributed this in a big way.

nor was the purpose specifically to protect Solana's price.

I think it was. What else would the purpose be? Note that I think the true purpose of "preventing Solana network downtime" would be to protect the price.

They're trying to avoid cascading liquidations down to zero, because everyone involved in the governance is holding substantial amounts of Solana. I think letting the liquidations happen on-chain, and even cascade, is much more in the spirit of crypto. But an argument could be made, just like with what happened in the LME Nickel market, if you think that letting people wrestle for control of the chain is true decentralization, or if you think that the true goal of a market provider is to provide stability above all else...

Forcibly "partially liquidating the position" above liquidation price is pretty indefensible. Are they going to point to a line in their TOS that says that at the end of the day they always have the right to do whatever they want?

tylersmith• 4 years ago

This is entirely about a single a project trying to prevent cascading issues within itself. Claiming this is about Solana itself is a lie and this post should be deleted.

flaque3• 4 years ago

What else would the purpose be?

I would suspect to protect Solend itself.

"Preventing Solana network downtime" feels more like an appeal to Solana people to vote on their proposal rather than ignoring it.

Note that I think the true purpose of "preventing Solana network downtime" would be to protect the price.

It is possible, and even the norm among people building things, to not think of everything in terms of "protecting the price" of a token.

When Github goes down, the engineers at Github are not thinking "oh no, we must protect $MSFT". They are thinking "Github is down, let's make Github not down".

eknkc2• 4 years ago

Also, it looks like the liquidation was pre approved by the contract that the whale deposited into. It was gonna happen regardless. They are doing this to change the way it is handled (off the chain instead).

I’m not sure about the implications but even Solend did not seize anything.

I still think this fucked up but it had nothing to do with solana.

potatototoo992• 4 years ago

Smart contracts are supposed to embody "code is law". It's not very lawful to then switch the liquidation with a vague "sell OTC over an undetermined amount of time".

SilasX4• 4 years ago

Right, the contract definitely allows Solend to seize the collateral at certain collateral ratios, but I can’t tell if this change just affects how they liquidate when that ratio hits, or it pre-emptively does so now, while the price is far from hitting that ratio.

Edit: okay it’s the latter. But remember this is not a seizure as in, just taking it, but also forgiving some of the debt at the same time.

https://news.ycombinator.com/item?id=31802692

555555• 4 years ago

Sorry, I've read this again and now I think this has little to do with Solana and entirely to do with Solend, and I think they're separate. Maybe someone who knows more about the space can clarify things. I now presume the funds needed to be deposited in Solend's smart contract in order for the trader to borrow the funds against his collateral, and Solend is pushing a patch in order to modify the code so they can seize the funds that are held within their own smart contract. So the Solana team may be totally innocent. But it's still news, because Solend doesn't look much like a "decentralized" lending platform where no one can seize your funds if they can seize your funds and modify the loan and partially raise the liquidation price, and I assume this is the biggest market on Solana. It's quite reminiscent of the ETH split / DAO hack.

jacquesm• 4 years ago

You could simply delete your post.

555555• 4 years ago

I thought there was a 10 minute rule. But actually I can still edit the headline and have. It's pretty big news imo.

flaque3• 4 years ago

A better title would be "Solend seized $170MM of user funds".

Claiming it was done by "Solana" is incorrect. Claiming it's to prevent a drop in Solana's price is clickbait & editorializing.

dang2• 4 years ago

Ok, we've changed the title to that. (Submitted title was "Solend just seized $170MM of user funds to prevent a decrease in Solana's price".)

If someone suggests a better title (i.e. more accurate and neutral, preferably using representative language from the submitted article), we can change it again. And if there's a better URL than the Reddit thread, we can change that too.

SilasX4• 4 years ago

Claiming it's to prevent a drop in Solana's price is clickbait & editorializing.

But … that’s one of the reasons they cite in justifying the proposal.

> It'd be difficult for the market to absorb such an impact since liquidators generally market sell on DEXes. In the worst case, Solend could end up with bad debt. This could cause chaos, putting a strain on the Solana network. Liquidators would be especially active and spamming the liquidate function, which has been known to be a factor causing Solana to go down in the past.

https://realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxP...

potatototoo992• 4 years ago

I'm only surprised why would the Solend team care about crashing the price of Solana. Why would the Solana care either for that matter (I don't know if they are the same people though). If it crashes because of a sudden bulk market liquidation then it is just working as intended, and eventually the price of SOL will recover if there is user confidence.

wmf2• 4 years ago

Heh, user confidence comes from the price. If the price goes near zero, many people will leave and never return.

ntoskrnl• 4 years ago

It might not have a lot to do with price. The Solana network itself is too fragile to handle a liquidation like this. They're trying to keep the network from crashing. Needless to say, the network has one job, and it keeps failing miserably.

Solana goes dark for the seventh time in 12 months - https://www.cryptopolitan.com/solana-why-is-solana-down/

colinsane3• 4 years ago

whale has put up $170M of SOL and borrowed $100M of USD. that USD was supplied by other people on Solend who expect to be repaid. “liquidation” is a way to ensure those lenders are repaid: if the borrower no longer has enough collateral to be incentivized to pay back the loan — or rather before that happens — liquidators will recover the lenders’ money by seizing the borrower’s collateral, selling it on the market, and returning the USD proceeds to the lenders.

the worry about SOL price drop is: can this $170M of SOL really be sold to make the lenders whole of their $100M USD? or will SOL significantly drop as that trade is executed and the lenders can only recover (say) half that?

most lending platforms place a cap on the total amount of each type of collateral they’ll accept — in large part to protect against these liquidation scenarios. it looks like there’s worry that Solend was too lax with their cap.

saurik2• 4 years ago

The holders of the governance token had to vote on whether to seize the funds. Something being "decentralized" is different from something lacking any means whatsoever to evolve.

Some of these DAOs are really dumb, and at the end of the day there is a team just asking for "straw poll" in a very real sense of the community before taking unilateral action, but there is no reason to invoke that here: the contract might simply be delegated to another contract on chain that allows an on chain vote to update the code to another version.

To me the damning thing here is that they have a 1% quorum and it was barely met and it seems like a large amount of that 1% might have been one large holder and so much like how democracy is certainly decentralized and yet in some countries (such as mine) no one votes and it gets awkward how decisions are made, that's also the state of decentralized organizations :(.

pcthrowaway2• 4 years ago

Not only does this not have to do with Solana (it could happen on a protocol on any chain), it's literally what people sign up for when they use a protocol which is upgradeable via a governance vote.

Sensible protocols put upgrades behind a time lock (3 days or 5 days seem to be common). That way anyone who doesn't like the changes can exit the protocol. Solend apparently doesn't have one, which means if you agree to use it, you agree the protocol may change while you're using it (though this should happen after a governance process at least).

If you choose to use a protocol that is upgradeable without a timelock, that's your own decision. Also, this supposed "whale" likely has enough Solend tokens to block the vote if they wanted to.

Since it's even open to a vote, I'd argue it's still fairly decentralized. A more centralized protocol would have privileged users who can make changes or seize funds without needing to go through a vote.

The /r/cryptocurrency subreddit also seems to have an axe to grind with Solana, and people will grind that axe without caring to understand the details of how these things work. I don't use Solana (have maybe $50 of SOL coins, but mainly play on EVM chains), but the frenzied shrieking of crypto shitposters who pile onto FUD bandwagons without doing any due diligence is headache-inducing.

ChuckMcM• 4 years ago

And @patio11's take : https://twitter.com/patio11/status/1538601104098852865 which is illuminating as well. The whole "crypto is speed running through the finance playbook" theme is fascinating to me.

melony• 4 years ago

So what is the downside of crypto? All the furor seems to be about how the whale's funds were seized. But there is no evidence to the contrary that this won't happen in day to day Wall Street banking.

From patio11's

When we say “crypto is speedrunning learning what finance already knows” sometimes it is about attacks but sometimes it is about quotidian topics like “Can you adversarially blow your clients out of trades which you think imperil your firm or other clients?”

Answer in traditional finance by the way: yes you absolutely can. Your lawyers have long since thought of that and put that language in your contracts, making it very explicit that if you trigger it you don’t need a vote on Discord to do so.

There is nothing that proves that traditional finance is any better than crypto. Though I do not recall the British government arresting Soros when he broke the pound.

threeseed2• 4 years ago

So what is the downside of crypto?

* Ordinary people being financially ruined along the journey.

* Environment being harmed by pointless mining.

* Investment money being wasted on companies that are simply cloning TradFi.

SgtBastard2• 4 years ago

So what’s the downside of crypto?

Ecologic vandalism, for one.

timeon• 4 years ago

You are right, crypto is pointless then.

laweijfmvo3• 4 years ago

Thanks, this Twitter thread explained it all in plain English.

Edit: Last question:

On the one hand here, we have one (rich) guy. Perhaps he is sophisticated, perhaps not, perhaps he believes code is law, perhaps not.
He used a computer program to borrow $100M.
The people who wrote that computer program are now terrified of it.

So does Rich Guy get to keep the $100M in stable coin regardless of what happens to the SOL he put up?

gitfan862• 4 years ago

He has to negotiate with the Solend people. They want to be accused of breaking a contract or breaking the law, and he wants financial compensation.

nrmitchi2• 4 years ago

The proposal succeeded hours after it was proposed, with one whale providing 1 million votes out of the 1.15 million votes in favor.

Decentralized my ass

mjburgess2• 4 years ago

Just like land under feudalism -- the land was /everywhere/ !

octoberfranklin2• 4 years ago

... but the ownership was not.

ATsch• 4 years ago

Hey, at least we have a good example of what "voting with your wallet" actually looks like if brought to it's logical conclusion.

jancsika• 4 years ago

In all fairness to crypto aficionados, it's not "voting with your wallet." It's more about using whatever is in your wallet to gain control over the financial...

Oh shit, someone stole my apes.

Can someone PM me to help me recover my apes? I can't vote without them!

yunohn• 4 years ago

Let me get this straight. They used the majority voting power of a DAO whale, to seize the funds of a user whale?

Irony at its finest.

vkou2• 4 years ago

The DAO whale only staked half-a-million dollars, the seized funds are $170 million.

The $170 million whale didn't show up to vote, so I guess under the rule of code-is-law, that means he can now be cut up, processed, and turned into whale burgers.

wronglebowski2• 4 years ago

How did the "whale" have so much invested in the market but such little voting rights?

qabqabaca2• 4 years ago

The whale has been inactive and almost certainly didn't vote on this proposal. The Solend team tried to reach out to them via socials multiple times and they never responded. You can see their attempts in the "What We've Tried" section here[1]

[1] https://realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxP...

555555• 4 years ago

has 170MM staked and isn't picking up the phone

Three Arrows Capital?

renewiltord4• 4 years ago

They don't have voting rights because they don't have SOL. They don't have SOL because they put it in there to get USDC+USDT.

If they don't believe in the depth of the SOL/USD(C|T) books this could just be a way to sell SOL or go short SOL.

This whale is probably just happy to default on the loan and get liquidated at this point.

granddemolisher2• 4 years ago

This whale is probably just happy to default on the loan and get liquidated at this point.

Understandable but absurd given the systematic risk.

wronglebowski2• 4 years ago

Are they in the red on the loan? The numbers and functions are where I get confused.

"a whale has deposited 5.7M SOL ($170M and borrowed 108M USDC and USDT borrowed)"

So they put in 5.7 SOL at some price, and used it to borrow stablecoins? If their position is liquidated how does that play out? If he traded coin for coin how do they get the traded assets back?

psKama• 4 years ago

This whale is probably just happy to default on the loan and get liquidated at this point.

It's too bold to assume this. This whale is probably so angry right now because they ruined his/her plan causing him/her million of dollars. 1) Find an opportunity to drive the price of SOL down due stupid DeFi design lacking 101 Economy knowledge. 2) Go short on SOL 3) Use the opportunity to cause a slippage of 46% in price which further triggers chain liquidation which causes the price even to go further down and most likely cause Solend to shut down creating more and more panic sell. 4) Make crazy profit.

Solend to call themselves "decentralized" now is just a joke.

yieldcrv8• 4 years ago

I think SLND (Solend) is the token involved in voting rights here.

qabqabaca2• 4 years ago

This needs a title change. The main effect this would have on the Solana network would be congestion due to so many liquidators trying to claim the collateral. It is not related to the price.

Additionally, liquidators will be incentivized to spam the network in an effort to win very lucrative liquidations. This has been known to cause load issues for Solana in the past which would exacerbate the problems at hand.

renewiltord4• 4 years ago

Account gov'd. All my SOLs gone.

tatertots12343• 4 years ago

Misleading title. This is Solend, not Solana.[1]

Not that this would be entirely surprising by Solana itself, which is a centralized chain that has been struggling to handle its network uptime and throughput in recent months.

[1] https://mobile.twitter.com/solendprotocol/status/15384413504...

Zaskoda3• 4 years ago

I've been working on a game for Ethereum for a while. In recent times, "I" has become "we" and we're getting a fair bit more serious about it. In the last year, we watched a bunch of local startups with relatively weak game concepts get heavily funded to build with Solana. It made me sad and, admittedly, a bit jealous at the time. In retrospect, I couldn't be more happy that we're still building for the Ethereum virtual machine. It turns out that pumping tons of money into a developer community for a half-baked platform isn't the best approach.

ShamelessC3• 4 years ago

You're building ones of those games people get paid to play and you're... proud of this work? As someone who has watched gaming become ruined by micro transactions and loot boxes, that's challenging for me to wrap my head around.

Sorry if that seems rude but I literally can't imagine a sketchier idea than that. If you have game dev skills, please please, just make an actual fun video game that you purchase and own for life. You know, something valuable enough that you don't have to pay people to play.

Zaskoda3• 4 years ago

No, I'm building a game that runs entirely on EVM. I love the notion that players pay per transaction and that money goes to people who run nodes that support the network. We are not designing any intentional "play to earn" mechanics. But thanks for assuming.

zomglings• 4 years ago

What’s the game? My team has been playing a lot of conquest.eth recently and we’re ramping up on darkforest, too, now. Would love to check it out of there’s anything available for us to try.

Zaskoda3• 4 years ago

It's Orbiter 8, but we're not on any main nets yet. Still just on test nets. We did release a new demo of our work in Febuarary so if you just want to get the gist of it, it's on our website Orbiter8.com and easy to access with MetaMask. I had not heard of conquest.eth until just now, but darkforest is super clever. It also happens to share a few high level esthetics with O8, given that both are space games. However, the mechanics of each are totally unrelated. DF is a neat example of things that can be done entirely on-chain. Good stuff!

moralestapia2• 4 years ago

LOL, all of these "decentralized" currencies turned out to be quite centralized in practice.

I like crypto, but it is true that it brings nothing new to the table.

rvz4• 4 years ago

Solend. Not Solana. Nice try though.

Time to put the pitch forks down and is no different to the DAO hack for Ethereum.

Next time, just read beyond the headline, titles rather than quickly spreading outrage everywhere in the comments section. It really doesn't help.

Especially if the source is... ...Reddit.

mscarborough• 4 years ago

and is no different to the DAO hack for Ethereum.

yikes!

the system has had material downtime 7 times in the last year. how is that OK?

rvz4• 4 years ago

how is that OK?

And who said it was OK? Because I didn't. The whole point is in the Solend case and the reversal of the entire Ethereum chain to restore the funds due to DAO hack tells us that not only 'decentralization' is a complete massive lie, but it also shows the nonsense about 'cOdE iS lAW', and it will only get worse with proof-of-stake.

We have been way past the lies of the 'decentralization' narrative since 2016.

throwoutway• 4 years ago

A smart contract can be upgraded to take over a whale’s account? How is that a thing? I remember the whole “code is law” on the chain, rather than trusting escrow/third party/judges

Grant emergency power to Solend Labs to temporarily take over the whale’s account so the liquidation can be executed OTC and avoid pushing Solana to its limits. This would be done via a smart contract upgrade. Emergency powers will be revoked once the whale’s account reaches a safe level

itake• 4 years ago

Contracts can be written as dumb proxies that allow people to 'update' their code (to correct for bugs or add new features). I believe at a high level, the creators have a 'proxy' contract that only they can set a variable that points to new versions of the primary contract.

gruez2• 4 years ago

I remember the whole “code is law” on the chain, rather than trusting escrow/third party/judges

Yeah, but in this case the code is law, it's just that the code in question also says that it can be modified by a majority vote.

foepys• 4 years ago

This is a fight between whales, nothing more. If the average "retail" coin holder thinks they have any influence, they are dead wrong.

This is the cryptocurrency reality where the small man is overpowered by the bourgeoisie who own so much more capital that they only need to fear each other.

tharne• 4 years ago

This is the cryptocurrency reality where the small man is overpowered by the bourgeoisie who own so much more capital that they only need to fear each other.

How is this any different than the traditional financial system? Remember 2008, where bankers were reckless and the government bailed them out, while regular people who were reckless got f--ked?

threeseed2• 4 years ago

This is a fight between whales, nothing more

It clearly shows you that even in crypto the rich and powerful can manipulate the rules.

senectus1• 4 years ago

Whales are the vast majority of why crypto is broken.

too few hold too much. the evidence is blatantly obvious they have been messing with the markets for their own purposes. because they hold so much of it, it makes for a very fickle and fragile market.

tootie• 4 years ago

Isn't this kinda the same as the equity stakes that owners of public shares can exercise? Except opaque and unregulated?

sva_• 4 years ago

Maybe Solend is short for Solana-end

rossdavidh• 4 years ago

Crypto has been an interesting experiment in rediscovering the reasons for all the financial regulations which we developed for regular currency in the late 19th and early 20th century.

RichardHeart• 4 years ago

Not your keys not your coins. Not your admin keys, not your coins.

cuteboy19• 4 years ago

Admin keys?

yieldcrv8• 4 years ago

A lot of "decentralized finance" projects have a way for a centralized entity to control them. Often times an individual. And other times a multisignature address controlled by two of the same individual's addresses.

Users should be more discerning but are not.

npc12345• 4 years ago

Not bitcoin? Not your coins.

dubswithus3• 4 years ago

Not your passport, not your identity.

https://i.pinimg.com/474x/fa/4b/51/fa4b517b17bd9749fa6259b9c...

https://i.warosu.org/data/biz/img/0036/10/1506336243756.jpg

soared• 4 years ago

Is there a good article. Pearly explaining the potential issue here? I don’t really know anything on chain liquidation, liquidators, etc.

edf13• 4 years ago

Just to clarify - this is Solana, which is and always has been big vc funded and controlled.

It has always been semi-centralised… but has big funds for pr.

It isn’t bitcoin or even Eth… it isn’t decentralised

ShamelessC3• 4 years ago

Right, but neither are ETH and BTC for 99.999% of the population that can't read smart contracts or manage their own wallet.

itsmeacupoftea• 4 years ago

Bold of you to think even 80,000 odd people can competently read smart contracts and manage their own wallet.

leodriesch• 4 years ago

Solana boasts about being scalable and capable of processing more than 1000 transactions per second, how is it that this is threatening the performance of the network?

encryptluks2• 4 years ago

Solana is constantly down and having transaction fail due to low TPS. I don't think they could lower the performance anymore than it is.

ShamelessC3• 4 years ago

Is this rhetorical? Because it seems naive to assume would honest about any of that.

NelsonMinar• 4 years ago

I'm sure this seizure of funds will soon be resolved with an orderly resolution process following applicable banking regulations.

yieldcrv8• 4 years ago

Yeah as soon as they went custodial they opened all of traditional finance’s banking regulations on themselves.

This is a good reason to call the regulator on them and any OTC desk they actually used.

nativeit• 4 years ago

If the "whale" happens to be an individual or organization that just needed to launder a shitload of illicit funds and found a handy loophole, then of course they didn't show up to vote--they already got their USD, why bother?

Flatcircle2• 4 years ago

In my humble opinion, so far, the only realistic use of crypto is as a store for digital art. Which is also a form of speculation actually, but at least you can enjoy the tokens as art.

If that's the case, then 99 percent of all the chains will fall away and leave just two.

ETH and Tezos.

presumably new tech will be discovered and new chains will be able to handle that. But as of now, the digitization of art actually works very well in crypto, in the form of NFTs (which is a polarizing word)

Solana is a VC back speculative chain which is trying to kickstart art and PFPs on it, because that's basically the only thing you can do right now with where the tech is at. But all the real artists have already made their home on ETH and Tez.

anonymousab• 4 years ago

In my humble opinion, so far, the only realistic use of crypto is as a store for digital art

Like, IPFS? Does that system count as crypto?

I'm not aware of any crypto system that both stores the art itself on chain and can successfully scale and be useful to a global audience (or at least Bitcoin or ethereum levels of use) without significant costs, slowdowns or sacrifices.

Flatcircle2• 4 years ago

Both IPFS and onchain. Most of AB stuff is onchain, as is CryptoPunks, most stuff on tezos is hosted elsewhere, and there's a great service that popped up that stores your art in case the chain or service folds. That's the type of new useful business in the space.

Solend seized $170M of user funds

Related Stories