Crypto lending platform Solend introduces borrowing limits – Bits Media

Solend, cryptocurrency lending platform on the Solana blockchain, seeks to avoid a liquidity crisis amid the collapse of SOL prices and huge margin requirements on whale accounts.

Turmoil in the cryptocurrency lending sector continues, since the general market decline, searching for sources of financing to maintain liquidity, remortgage of assets, and a high share of investors’ margin requirements lead projects to the brink of closure.

Fearing the risk of liquidity shortage and SOL collapse, Solend submitted proposal SLND3 to the vote of project participants, which aims to introduce a borrowing limit for each account of $50 million and reducing the maximum number of liquidations.

Any debt over this limit will be eligible for liquidation, regardless of the value of the collateral. It is also proposed to temporarily reduce the maximum liquidation closure ratio from 20% to 1%, which will limit the amount, which can be liquidated in one transaction, and will also reduce the penalty for liquidation of SOL from 5% to 2%.

In addition, Solend turned to market makers for help, which will help provide better liquidity on the network and reduce pressure on the DEX market to a manageable level.

Note, that from April to June the volume of locked funds in DeFi protocols decreased by 3 times - s $229 billion to $74 billion. This indicates, What are the methods for saving a business?, undertaken by cryptocurrency lending platforms, cause investors more concern than hope.

The Solend community had mixed reactions to these proposals, Counting, that they are ineffective. So, some participants think, that platform limit restrictions can easily be circumvented by creating additional accounts. Besides, Solend's reference to the negative impact of whale margin calls does not stand up to constructive criticism.

“If large loans pose a systemic risk, they must be overcollateralized. This is a cryptocurrency, not Tesla. Most of us are not whales, and if the platform cannot function without a single whale, it's still trash", – says the comments on the project website.

Recently it became known, that cryptocurrency broker Voyager Digital Voyager approached Alameda Research for a loan in $500 million, to cope with market turmoil.