Solana-based lending protocol Solend introduced the “SLND3” proposal intended to avoid a liquidity crisis as whale accounts have huge margin calls, a Tuesday statement showed.
Previously, Solend had planned to overtake the whale accounts with emergency powers. However, it faced huge questions about the authenticity of voting results.
On Tuesday morning, the Solend team continued to post new proposals and ask interested users to vote. This proposal, called SLND3, has the core goal of controlling the risks of borrowing money through Solend, including by:
- Introducing a per-account borrow limit of $50M. Any debt above this limit will be eligible for liquidation, regardless of collateral value.
- Rolling this out gradually by starting the per-account borrow limit at $120M and reducing it gradually until $50M is reached. A reduction of $500K per hour will be targeted.
- Temporarily reducing the maximum liquidation close factor from 20% to 1%. This caps the amount that can be liquidated in a single transaction.
- Temporarily reducing the liquidation penalty for SOL from 5% to 2%. This should limit liquidator spam while still being enough of a bonus for liquidators to break even on slippage.
This new proposal will be voted on within one day – instead of within six hours, like the previous two proposals. Solend noted that this proposal offers a temporary solution to mitigate immediate problems and risks. If approved, the proposal will take effect as soon as possible.
In addition, Solend is reaching out to market makers to help provide better on-chain liquidity. This, combined with the proposals, is expected to reduce decentralized exchange (DEX) market impacts to a manageable level.