Solend seized $170M of user funds
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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.
[0] https://en.bitcoin.it/wiki/Script
[1] https://en.bitcoin.it/wiki/Fungibility
[2] https://sethforprivacy.com/posts/fungibility-graveyard/
One might think Lightning Network would be a good solution, but LN is fungible, so that wouldn't work.
Still, colored coins is an awesome concept and I'm planning to help with at least 1 use-case (fingers crossed!) in the next few months.
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.
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.
A replacement doesn't have to be better in every single facet.
No.
I take it that you still use a CRT monitor then? After all, modern displays (eg. IPS/VA) aren't better than CRTs in every respect (response time, motion clarity, arbitrary scaling).
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.
why is this so undeniable? I would think well-implemented cryptocurrencies would be fairly regulation resistant
There will be cases in which a weak state economy can become bitcoinized the same way some have become dolarizesld, but for strong states it is easy to make the border between the currencies as tight as they want it.
You do? What is the purpose of cryptocurrency if you are just going to convert back into cash the moment you use it? I think the end goal for cryptocurrency is to create a circular, P2P economy[0][1]
Seems pretty difficult to regulate only some cryptocurrencies if it's already possible to anonymously and trustlessly swap between them[2]
If they don’t comply, you tell the registrar/host/ISP to shut them down, then they don’t have a website anymore.
The point is that at some point real people, subject to laws and regulations, will have to touch the thing you’re buying. If you’re buying a sandwich, it doesn’t matter the guy making the sandwich accepts crypto if the government can put them in jail for doing so.
Regurgitated “fiat” meme.
Counter-example 1: buying services over the internet. What fiat and where is the relevant border?
Counter-example 2: go overseas and use services. What fiat and where is the relevant border?
Arguments about fiat and borders are often silly. However, a jurisdiction can make crypto illegal or risky.
A government can make it arbitrarily hard or illegal to do that.
You can write and pass whatever law you want. If it can not be enforced, it does not exist.
https://ij.org/press-release/new-report-finds-civil-forfeitu...
But there's no evidence it stops much real money laundering:
https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...
If money laundering were effectively dealt with, that would stop almost all theft and organized crime, as laundering the proceeds of these crimes to spend them would be nearly impossible.
Obviously that will never happen.
Anyway I’m not saying money laundering doesn’t happen, it does… and that’s probably the best case use case for crypto and one of the pillars of its value-add. People who don’t care about legality won’t care if crypto is regulated away either. I’m just demonstrating it’s not free to get away with these crimes. Plenty of people get nailed for money laundering every year.
Regulation and law indeed may not be able to beat crypto technologically. They don't need to. Humans are the weak squishy link in the chain. I don't need a supercomputer to crunch down your crypto, I need a warrant for your arrest or subpoena to ask for all your documents. I can outlaw your ability to operate without logs. Sure that would suck, but equally in crypto currency and normal world. Either exists as much at the mercy of the government, democratic or otherwise, to preserve the privacy, as much as the technological capability.
Unless we go completely anarchic (and I'm not personally looking forward to that), humans will remain squishy and laws will remain relevant.
Strong cryptography still remains a formidable barrier for law enforcement, regardless of what pessimists like munroe would have you think.
I guess the joke is that security is presented as an all-or-nothing situation, when in reality security is just about disproportionally increasing the cost for attackers and decreasing the severity of their attacks.
In what world is the Government your only threat?
But until we can make cryptography that is criminal-proof but not government-proof, and until the government can feasibly enforce its use, then I don't think it really matters.
It's hard to imagine any tool that only works against criminals but not against the government. Especially considering that there's a spectrum between criminal organizations and government organizations.
You are missing the point; the point of Randall's comic is that most, if not all, cryptographic methods fails under the threat of physical violence. For most of us in the western world, and certainly for most of us on this forum the most likely threat of someone using violence to extract cryptographic secrets from you would be the entity that claims a monopoly on it - the government (your local mugger is not going to request you install his CA root store).
Most criminals, and the majority of white collar criminals who would benefit the most from the world disabling HTTPS do not have the mechanism, infrastructure or capability to exact violence on me the same way the government can.
So your implication that "because cryptography is violence resistant, we should unlock our hard drives" is very naive.
Even going full Nazi, how do you enforce a law that technically challenging without bankrupting the government or crippling the economy? And what time-frame does it take to phase in?
Drugs paid with cash are challenging. Crypto is not. Authoritarian states can do deep packet inspection and random phone/computer checks. Advanced states can just roll it into their AML frameworks, as well as track the purchase of mining equipment and their inputs. Both will offer whistleblower rewards.
There will still be people who use it. But it will fall out of the mainstream. More people are more enthusiastic about cocaine than about crypto, and your enjoyment from an ounce of cocaine isn’t dependent on others using it. For crypto, it is.
might this be part of the DYOR reasoning? some gut-level reaction that “unless we encourage every individual user to take responsibility, then most of those users will welcome 3rd party (govt/bureaucratic) regulators”?
i don’t know that this is wholly delusional, either — i think it’s just a difficult culture to preserve during massive growth. but look at any mid/large crypto project and they usually show off their audits. audits which they willingly paid for because enough users care about it that demonstrating your system is hardened actually has positive ROI. it happens enough that distinct auditors each have their own reputation (oh, X audited notable project Y => their audit on new project Z probably means something). this whole auditing system is in some very real sense a form of “self-regulation” — but the whole thing is predicated on DYOR.
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.
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.)
I don’t think fiat money or banks can go away unless all their functionality can be replaced by crypto and do at least as well.
With finances, it’s more about preventing the bad over getting the good. As long as crypto introduces a big problem, there’s no way it becomes the primary financial tool.
In fairness, I am making some assumptions here, so maybe my view of finance is very wrong. I welcome any alternative opinions.
Crypto is trying to replace banks and modern finance, correct?
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.
The vast majority of people losing money in the crypto world are the equivalent of people installing sketchy extensions in the early days of the internet that perform attacks on unsecured online banking portals. That this doesn't happen more often against banks is largely a function of the gated-ness of browsers and that targetting banking infrastructure (and national-level infrastructure for that matter) is the hot ticket that guarentees getting the undivided attention of three letter agencies.
For example, if you buy something on eBay and the seller sends you a brick packed in a cardboard box instead, you dispute the charge on PayPal and most likely get your money back. Or suppose that some pissed off hotel clerk decides to charge your credit card for made-up damages during your stay in a hotel.
My experience is that it’s not hard to get your money back. This is why actual scams tend to involve some step where you convert money into something else—since a wire transfer or ACH transfer can be reversed or at least traced, you have scams where the patsy has to turn transfers into cash or gift cards.
And no, a wire transfer or intra-bank transfer is typically not reversed. Even for big-names, like Linus, it is not so simple and requires personal connections with industry insiders to even get simple cases of fraud reversed.
[1] https://twitter.com/swiftonsecurity/status/15121875924140523... He mentioned it in his long WAN VODs, so there isn't a nice source to link to
At the end of the day, what I care about is that I can safely make a transaction to get something I want in exchange for something that I have. The safety protections involve the ability to identify accounts with real people within the reach of the law, the ability to reverse transactions made fraudulently, etc. If I have US dollars and want something that isn’t US dollars, then I have a ton of safe options to do that (with different protection depending on what I choose). If I instead have some kind of crypto asset and want something that’s not a crypto asset, the fraud protection is much weaker.
Yeah, crypto is kinda bare-metal. Isn’t that a major problem with it?
> And no, a wire transfer or intra-bank transfer is typically not reversed.
Yes, it sounds like we agree on this point. This is part of why most people don’t use wire transfers.
There are, however, conditions where wire transfers can be reversed. Banks are also somewhat proactive about protecting you from making wire transfers. It’s not a service that they offer lightly.
Crypto's closest anologue is wire transfers... which you excluded with the reason of "most people don't use them".
>At the end of the day, what I care about is that I can safely make a transaction to get something I want in exchange for something that I have. The safety protections involve the ability to identify accounts with real people within the reach of the law, the ability to reverse transactions made fraudulently, etc. If I have US dollars and want something that isn’t US dollars, then I have a ton of safe options to do that (with different protection depending on what I choose). If I instead have some kind of crypto asset and want something that’s not a crypto asset, the fraud protection is much weaker.
Again, try applying any of this to wire transfers. Almost all of these concerns apply to both crypto and wire transfers.
>Yeah, crypto is kinda bare-metal. Isn’t that a major problem with it?
What's the issue with having access to a permisionless, bare-metal system?
>There are, however, conditions where wire transfers can be reversed. Banks are also somewhat proactive about protecting you from making wire transfers. It’s not a service that they offer lightly.
That is not reversing, that's simply preventing you from initiating the transfer.
I had thought that this was a comparison of modern non-crypto banking / finance systems to the infrastructure provided by crypto, but you have made it very clear that you consider a more general comparison "out of scope" for whatever point you are trying to make.
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?
calling inflation a legal scam is borderline on the conspiracy fence.
> if people were given the choice to participate in both systems, which one will thrive?
Well, crypto has been around for about 10 years. There's been plenty of choice, and yet what do you see today?
What do you mean conspiracy? It's the official purpose of the Fed to maintain inflation low, it has failed, it has cost a devaluation of the assets of everyone holding dollars or dollar-linked financial instruments, and it's gone significantly down in value.
> Well, crypto has been around for about 10 years. There's been plenty of choice, and yet what do you see today?
A thriving crypto market big enough to be acknowledged as a threat by the head of the federal reserve, the head of the central european bank, and several other high ranking officials.
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.
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.
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.
Very flawed argument.
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.
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!
The headline on HN has already been updated to "Solend just seized...", rather than "Solana just seized..."
> [A large liquidation] 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.
> Letting a liquidation of this size to happen on-chain is extremely risky. DEX liquidity isn’t deep enough to handle a sale of this size and could cause cascading effects. 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.
So, according to Solend, there are two issues at stake here:
1. The network might have technical problems processing the amount of transactions.
2. DEX liquidity isn’t deep enough to handle a sale of this size and could cause cascading effects
What they mean by this second point is that, should a sale happen, then:
1. not enough people will stand willing to buy at a favorable price ("liquidity isn't deep enough")
2. this price crash could cause others to get liquidated in turn ("cascading effects")
This is a statement about the impacts on prices, so IMO it's not editorialized.
Claiming it was done by "Solana" is incorrect. Claiming it's to prevent a drop in Solana's price is clickbait & editorializing.
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.
https://realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxP...
Linked from this tweet by solend
https://twitter.com/solendprotocol/status/153844135044142284...
Speaking of which suggests to me that the majority of the tribal redditors in that subreddit commenting have not been around since the controversial Ethereum DAO hack which already abandoned the nonsensical 'cOdE iS lAW' idea and already set that precedent and is no different to what is happening to Solend on Solana.
So it is no surprise that the majority of DeFi, DAOs, etc has been one giant scam which will result in the collapse of many tokens, projects and even blockchains because of these false promises from the very beginning. The reality is that after regulations come in, only a select few blockchains projects will stick around.
That's not to say the current URL is the best one. But probably a neutral third-party source would be better, though such a thing may not exist.
That’s how much I appreciate what you do here.
Your “spidey-senses” are invaluable. I hope you train a mentor before you leave us.
My personal opinion is that the Governance URL would be far more neutral than any article or thread where people are piling on to use this to criticize Solana (the same change to a protocol could happen, and probably has happened, on Ethereum). The /r/cryptocurrency subreddit is not neutral when it comes to Solana, and 99% of the commenters don't understand what they're talking about.
Criticizing Solend if the proposed changes are made is fair, but this is basically how DAOs work... token holders vote to make proposed changes. If you don't like the existing implementation and governance process, you should avoid the protocol, or pay attention to what might change that could affect you.
If I sign up for a web service and agree to a ToS (which always says it may change and that continued use means I'm agreeing to any future changes), I have far less transparency into what changes might be made. Solend users agreed to the protocol implementation which includes upgrading without a timelock (bad practice). But at least there is a governance process, which gives users a chance to get out when unfavourable changes are happening.
Also, I don't know enough about Solend or Solana to verify this, but users of lending protocols typically get a distribution of the governance token based on their stake, which means the "whale" being discussed likely could block this vote if they wanted to.
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...
Even with such a crash or "liquidation function" also crashing the network, blocks will eventually continue to be produced even with Solana's level of availability. So just let it happen.
Anyway, too late, half a million dollars of tokens voted to control $170m of user funds.
Solana goes dark for the seventh time in 12 months - https://www.cryptopolitan.com/solana-why-is-solana-down/
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.
Or is it that if the price crumbles the whale will be able to pay back the loan for pennies on the dollar because they need to repay in the crashed tokens?
One way was a really good bet and having their tokens confiscated to ensure they don’t benefit is probably outright fraud while the other way is just a bankruptcy where confiscating their tokens is probably outright fraud unless they have a previous contractual agreement which states it is permissible.
Hard to tell what is happening in the cryptocurrency space because too many people have an agenda to just state the facts.
—edit—
Or a loan which may or may not need to be liquidated at some future point and they seized the collateral “just in case” like pre-crime.
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 :(.
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.
Decentralized my ass
Libertarianism with land as property is feudalism.
There really is no private land ownership in the USA. Stop paying your property tax and you'll find out who your landlord is. Raising and lowering that rent payment is the tool for balancing homeownership against what you describe as feudalism.
Oh shit, someone stole my apes.
Can someone PM me to help me recover my apes? I can't vote without them!
Irony at its finest.
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.
> 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.
LOL
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?
It clearly shows you that even in crypto the rich and powerful can manipulate the rules.
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.
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.
> 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?
I'm trying to understand this, but it's beyond me. Can someone ELI5? Here's what I get:
Someone borrowed $108M (in USDC and USDT) and put up 5.7M SOL ($170M USD) as collateral, with the terms that if SOL should fall the lender can liquidate the SOL to recoup their loss; in this case, if SOL reaches $22.30, they can recoup ~$20M USD. This all sounds like a perfectly normal lending process.
SOL is (was) currently at $32, but the claim is that the borrower seems to have no interest in taking any action and allowing the liquidation to occur. Question: who's making this claim and on what basis?
The next claim is that this liquidation, if it were allowed to occur, would cause the price of SOL to fall even further, which also makes sense. The market cap of Solana seems to be ~11.5B (billion with a B); $20M shouldn't be the end of the world? 24hr volume is ~$2B, so this would be 1%. Question: why is allowing this liquidation the end of the world?
Last question: what does any of this have to do with Solend? Are they the ones that lent the $108M out, or are they just the middle man? If the former, is the concern that they won't be able to recoup their losses under the terms of the contract and falling price of SOL?
The Solend Team.
https://realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxP...
> Question: why is allowing this liquidation the end of the world?
Its not. They believe a function in their own project will cause the underlying Solana blockchain to have some uptime issues, because a similar function has been a culprit in the past, according to them. (Solana has failed to produce blocks periodically, I haven't followed more specifically why) This function will be called autonomously if the price of the collateral in question continues to decline. The rebuttals are:
a) a big cascading liquidation being interrupted by block production issues will just resume as block production resumes. so that's stupid. Solana goes down all the time, if other applications there can't handle that by now that's those application's problem.
b) DEX liquidity isn't all liquidity. So if $170m crashes the price on a DEX, that's just an opportunity for anybody paying attention to buy Solana cheap on the DEX and sell it for more on centralized exchanges like Binance and Coinbase. Its not Solend's problem. It is a completely unnecessary and amateurish "vote".
> what does any of this have to do with Solend? Are they the ones that lent the $108M out, or are they just the middle man?
They're the service being used where people deposit collateral, yes.
Right, that's my confusion. Which is what makes the whole thing smell fishy.
Currently governance projects have no bylaws to constrict the nature of a proposal, and they have no continuity between proposals to restrict future proposals, and there is no arbiter, and proposal outcomes mostly have to be coded by the original team so people are trusting them, and there is no agreed upon compensation path for a third party implementation team.
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".
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.
Just wanted to clarify what dhey did.
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.
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.
* 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.
Ecologic vandalism, for one.
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?
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.
I don’t really play games but I guess that sounds fun.
>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
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.
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.
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.
So the greater fool theory isn't a feature of the platform as it's often portrayed as by it's detractors, but rather a self-imposed one by the new cohorts?
I guess that while the tech matures the fomo aspect never seems to go away regardless of time.
> 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.
It's currently .20 to do a 10 min tx on BTC layer 1, and near free and instant on layer 2. How is this expensive?
As long as cryptocurrencies are far out on the risk curve, this will never disappear.
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.
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...
It has always been semi-centralised… but has big funds for pr.
It isn’t bitcoin or even Eth… it isn’t decentralised
I like crypto, but it is true that it brings nothing new to the table.
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.
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.
Users should be more discerning but are not.
All the extremely high alpha opportunities I’ve had were because the opportunities presented themselves in the protocols that I knew and understood. It was all luck that “my” protocols were the ones that became wildly mispriced or had a flaw or attracted vast interest. And it is distressing seeing all these different protocols have these wild returns or opportunities that I was only able to be aware of in hindsight. But I don't chase.
My strategy has been to wait. I do this in many markets and asset classes. Wait for the perfect storm that fits my criteria. It doesn’t matter to me that other people can’t understand it because the trading or valuation book with survivorship bias on its side hasn’t come out or been revealed yet. Since it hasn’t had time to. By the time the equivalent of 1980s technical analysis books come out for this market that some future children will swear by, it will just be a different market.
For DeFi sector, I also wait and act fast. I saw a protocol (that I was already familiar with) get hacked and people sold off the tokens. Initially seeing the price drop so hard, I went to twitter to see that there was a hack. Then I went to discord to see what people were thinking. Then in parallel I went to the blockchain as soon as I found the transactions. The information asymmetry immediately presented itself to me. People were afraid of many things happening that could not happen. Like they were primarily afraid that the hacker had a bunch of the project’s token and would sell it - crashing the price before the other users did. Secondarily, they were afraid that the project’s technology was irreparably flawed. And thirdly, the lowest weight, they were afraid that the reputation would be hit. For one and two they were simply wrong. So I bought the dip. For three, well because users aren’t discerning lol… there just isn’t a history to really support that when the supply stays the same, and there are so many for projects can do to appease their audience, so it fit my risk profile and the token recovered to pre-dip prices in a week and I ultimately made 6,000% on it. For the users of the actual product, the ones that took out insurance policies elsewhere were immediately recompensated. There should be news articles about that, but again I’m pretty fine with the information asymmetry where there is a belief that everything goes wrong.
People don’t know how to do what I did, but what I did is a very low bar. Its not genius, it is reading some code and blockchain analysis, and the luck/risk is heavily reduced. Confirm with the blockchain and know how that protocol works. Or don’t participate. The people I compete against do that, and the people I compete against in other markets are also highly optimized for those markets, so who cares if “reading code” sounds like an absurdity to today’s wannabe crypto traders.
Another thing I do is scan the blockchain for previously unique method signatures. This means someone is launching a clone. It doesn't matter to me that other people don't scan like that or at all, I know that I'm competing with some people that also do this.
If you don't know what you're buying, get out of the market. Or be my exit liquidity.
https://i.pinimg.com/474x/fa/4b/51/fa4b517b17bd9749fa6259b9c...
This is a good reason to call the regulator on them and any OTC desk they actually used.
[1] https://realms.today/dao/7sf3tcWm58vhtkJMwuw2P3T6UBX7UE5VKxP...
Three Arrows Capital?
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.
Understandable but absurd given the systematic risk.
"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?
Ideally they over collateralize. So if SOL is 100 USDT, he puts in 5 SOL and gets 50 USDT per SOL (250 USDT). If SOL approaches 50 USDT, (say 51 USDT) they sell the SOL he gave them and keep the proceeds (they have 255 USDT and are ahead by 5 USDT). The loan has reached an end condition.
Another thing that could happen is he does something with the 250 USDT loaned to him and he gets 300 USDT. He gives back the 250 USDT and gets back his 5 SOL and now has 5 SOL and 50 USDT (minus some small interest or fee). This is another end condition.
All works on the small scale. But presumably you can think of exploits on the large scale.
A simple one is that the loan is so large in that they can't liquidate without slippage (price moving as they sell causing them to gain less than they anticipated). In this case, they might want to exit a little earlier.
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.
People don’t really make crazy profits by following the herd, they see something everyone else misses and bet big.
The position of the whale, under the parent’s plan, is a clumsier version of what I described because it leaves an unknown lag before the SOL gets dumped.
> Unless they had a plan that only worked by doing it the way they did it.
I don’t know many short gambles that actually take a long, and which deliberately introduce uncertainty in when an asset is dumped on the market. And if this is your best defense of its merits (“maybe this is the only way it would work”), you’re offering nothing but unbacked speculation (that mistakenly read me as suggesting they “follow the herd”, no less).
>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.
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.
yikes!
the system has had material downtime 7 times in the last year. 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.