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Soland and Mango Market team together to handle $ 207M debt – The Defiant

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As the drama revolves around a whale and Soland, risky debt is spreading across Solana’s defy ecosystem as it moves into a new episode.

Soland, Solana’s top lending protocol, has agreed to share its largest user loan with rival, Mango Markets – an anonymous whale with $ 207.3M SOL, according to the Governance proposal.

Threat of protocol

The sum consists of a quarter of the total value of Soland Locked (TVL) and poses a threat to the protocol. On June 22, the whale pays the money 11.5M Debt, according to Soland. It is not clear exactly how much money has been returned in the last few days.

“It shows a commitment to work and solves the problem of using USDC in Soland … We are in contact with the mango team and [the whale] To come up with a long-term plan, ”Soland Post.

“Although this does not completely solve the problem, since the large liquidation wall still exists,” the team added, meaning a large part of the location could still be the subject of a margin call.

Mango’s move to save Soland did not go unnoticed by his community. Daphne Durairaj, co-founder of Mango, posted a summary of the plan and said it could be at risk in the protocol community forum.

Extra risk

“Most of you probably know that there is a borrower with 6m SOL collateral who wants to borrow 150m + stable coins,” the post said. “It had its full position in Soland, but has recently begun to make some shifts between mango and other protocols. We will have some additional risk if the borrower deposits his deposit with us and borrows a maximum of USDC. “

On June 19, the Soland team warned that steps must be taken to address the risks associated with its largest whale account, which borrowed USDC and USDT $ 108M against 5.7M SOL tokens. Soland estimates that the account represents 95% of SOL deposits, 88% of USDC borrowings, and a quarter of dApp’s TVL.

The team said a further 20% drop in the price of SOL to $ 22.30 would cause the position to start liquidating, but the size of the position could have a significant price effect that Soland could hold itself into bad debt.

‘Although this does not completely solve the problem, since the large liquidation wall still exists.’

Soland

Soland said it had made unsuccessful attempts to contact the whale through on-chain messaging and public Twitter posts since June 13.

SOL has since bounced with the larger crypto market, according to CoinGecko, the midday transaction has jumped around 3% in UK time in the last 24 hours.

The news came as the pressure on DeFi debt intensified. The battle to manage the loan obligations of Celsius and Three Arrows Capital has turned into a crisis in the beer market.

Debt limit

A June 19 proposal from Soland to take control of the whale’s account was quickly passed by the administration before it was abandoned after sharp criticism of the party by decentralization advocates. A new plan to introduce a loan limit that results in a progressive termination for loans over M 50M on June 21.

Whales appear to be changing resources. Same day, Soland Tweets Users who have started using USDC to reduce it to 100% will be able to withdraw stablecoins from the protocol again.

Spread the position

The Soland team says Timothy has begun to expand its position on other lending platforms after moving to Solana’s mango market on a $ 25M USDC loan.

Durairaj said the whale wants to borrow $ 150M in stablecoins, the protocol stating that if the whale uses 100% of the USDC in the protocol, the protocol could increase its maximum annual interest rate from 150% to 300%.

He noted that there is a risk of the whale’s position becoming too large without serious slippage in the case of significant price reductions for SOL, which means the protocol may leave insufficient collateral to repay the loan in the event of a crash.

Such incidents could threaten to reduce Mango’s 10M USDC insurance fund and possibly cause social harm to USDC depositors, although Durairaj said Mango could be used to cover D 60M in DAO’s treasury assets or to provide a liquidity buffer.

Twitter user Fat_Crypto_Losr Feedback That would limit the sum of the stable coins available to the mango whale. “I wonder what will happen to Mango, I wonder what will happen to Soul. If we are not ready for this level of action, do not accept it, ”they tweeted.

Durairaj The answer The limits that will be introduced along with the Mango v4 iteration and the Mango Upgrade Council should be used sparingly during this period. The co-founder added, “If people think the risk is too high, they should remove their deposit from the mango.”

Like a circus

Many in the Soland community are dissatisfied with the situation, although taking a part in the whale’s position reduces the risk of mangoes.

Smooth Says “Yes, they heard you[r] The advice is basically on gun points. It doesn’t rotate as optional, and they like to do it. This whole failure makes the protocol look like a circus. ”

Redcryptopanda Tweets “I’m still here [in] Surprisingly you can actually take action and take control of the funds. Just mind blowing. It shouldn’t even be done. ”

The incident has ruled out Soland as the biggest defense protocol in TVL’s Solana. After falling 58% in 30 days and 32% last week, dApp is now Solana’s third largest with $ 243.6M – the weakest performance among Solana’s top 25 protocols, according to Defy Lama.

Serum, a decentralized exchange, is now Solana’s largest dApp with $ 293.6M, followed by Liquid Stacking Protocol Marinade Finance with $ 254.5M.

Soland and Mango Market did not respond to requests for comment.



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