Solend seized $170M of user funds

This is a correct description, though. From the quote in the article (emphasis added):

> [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.

> This is entirely about a single a project trying to prevent cascading issues within itself. Claiming this is about Solana itself is a lie and this post should be deleted.

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?

Bitcoin has some scripting[0] functionality, and its non-fungibility[1][2] can facilitate NFT-like colored coins[3][4]

[0] https://en.bitcoin.it/wiki/Script

[1] https://en.bitcoin.it/wiki/Fungibility

[2] https://sethforprivacy.com/posts/fungibility-graveyard/

[3] https://en.wikipedia.org/wiki/Colored_Coins

[4] https://www.youtube.com/watch?v=889JSfIaPzs

Right, the contract definitely allows Solend to seize the collateral at certain collateral ratios, but I can’t tell if this change just affects how they liquidate when that ratio hits, or it pre-emptively does so now, while the price is far from hitting that ratio.

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.

https://news.ycombinator.com/item?id=31802692

This is a fight between whales, nothing more. If the average "retail" coin holder thinks they have any influence, they are dead wrong.

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.