Due to a sizable loan position that is now underwater, Solend (1) is in danger of collecting bad debt. The initiative clarified that the enormous loan's owner is being steadily liquidated due to network congestion.
What's causing these issues?
Infrastructure problems prohibit a sizable loan position on the Solana-based lending platform Solend from being fully liquidated. The approach thus runs the danger of accumulating bad debt. The loan is kept in the main lending pool at Solend. The value of the collateral used to secure the loan has decreased due to a significant decline in solana (SOL) prices (2), which have dropped by roughly 50% over the previous three days.
What about the others?
Other market players would have paid off the debt under normal circumstances. However, the platform has encountered oracle problems brought on by network congestion, hindering their attempts. The huge user who occupies the largest position in the main pool is the owner of this loan. At the time of writing, the user owes the protocol $32.6 million in SOL collateral and $29.7 million in USDC. The holding is greater than Solend's 85% liquidation threshold, or $27.6 million.
What Measures are being taken?
To get the debt back under the liquidation threshold, the protocol must sell approximately $2 million in SOL collateral. The protocol is having trouble finishing because of Solana's congestion problems, even though it has been removing collateral from the position to safeguard its holdings.
Solana is now busy with sporadic oracle updates; customers may experience difficulty withdrawing, the lending platform warns. The project made it clear that, despite the technical difficulties, the owner of the substantial loan is being steadily liquidated. Solend expressed that its congestion problems had been resolved and that partial liquidations of the whale account had been proceeding without any significant problems..