MITIGATING DISASTER? The tenets of decentralization and protocol governance were put to the test this weekend after users of a Solana-based protocol called Solend voted to take over a user’s account in an attempt to prevent a margin call that would have liquidated $20 million worth of SOL tokens and potentially clogged the Solana network.

The so-called whale, which borrowed $108 million in stablecoins against 5.7 million SOL tokens (representing about 95% of the lending protocol’s deposits), had gone radio silent as it faced possible liquidation if Solana’s token dropped to $22.30.
Solend managers pushed through a governance decision granting them “emergency powers” to commandeer the wallet.
This proposal, passed ultimately by a single vote, received intense public backlash for flying in the face of crypto’s reigning principle to let code, not humans, rule.
A second vote passed Monday morning reversed that initial decision, and granted the Solend team time to take less-drastic measures, though this too was decided by a single wallet representing 90% of the votes.

STAKED ETH: CoinShares addressed public concerns that Lido Finance’s staked ether (stETH) deviating from the price of ether (ETH) will lead to another catastrophic selloff like the decoupling of terraUSD (UST) from the U.S. dollar, in a new blog post.

Unlike a stablecoin, the digital asset manager wrote, stETH does not have to trade 1:1 to function correctly. Moreover, because Ethereum has not enabled withdrawals from staking, there are “no arbitrage opportunities to keep the price in check.”
Meanwhile, in an attempt to mitigate the risk of stETH decoupling further from ETH, stablecoin issuer MakerDAO has voted to turn off a DAI Direct Deposit Module built with decentralized crypto lender Aave.

ON PAUSE? Hong Kong-based crypto lender Babel Finance has reached preliminary agreements to repay some of its debts after it was forced to pause large withdrawals last week, according to an update Monday.

At the end of 2021, Babel Finance had an outstanding loan balance of over $3 billion and on Monday announced a $1,500 per month withdrawal limit.
Meanwhile, another distressed crypto lending platform Celsius Network has canceled scheduled Q&A sessions on YouTube and Twitter it has held since 2018 while users are still unable to access their funds.
Last, in Brazil, Binance suspended transactions to and from Brazil’s government's payment system Pix citing a new central bank policy.

NFT ROUNDUP: On Friday, non-fungible token scaling platform Immutable announced a $500 million venture fund focused on Web 3 gaming, NFTs and its own Immutable X non-fungible token platform being built in collaboration with GameStop. The new venture fund will provide some token grants and investments in Immutable’s native token IMX.

Meanwhile, Joseph Delong, the former SushiSwap chief technology officer, is helping build a platform called Astaria and allows people to take out ETH loans on their NFTs that has just closed an $8 million funding round.
Elsewhere: Decentralized exchange (DEX) aggregator ParaSwap announced Monday it’s releasing the first peer-to-peer NFT trading app available in Apple’s App Store.
Finally, auction house Christie’s Web3 lead, Noah Davis, is joining Yuga Labs to oversee its recently acquired CryptoPunks brand.

ODDS & ENDS: ByBit, a crypto exchange, may lay off up to 30% of its employees. An Illinois resident sued Terraform Labs, Do Kwon and several VC firms for allegedly violating securities laws. The FBI and LinkedIn partnered to fight crypto schemes.

– D.K.

June 20, 2022

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