Apr 21, 2025: Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

 explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

Weekly highlight — Trump wants to fire Powell? 

US president Donald Trump is actively considering firing Federal Reserve Chairman Jerome Powell, following Trump's public criticism of Powell for not moving quickly enough to reduce interest rates. National Economic Council Director Kevin Hassett confirmed that the administration is examining this option, suggesting that Powell's actions have politically favored Democrats. Hassett argued that the Federal Reserve's decision to raise interest rates shortly after Trump took office was intended to undermine the economic impact of the tax cuts implemented during his administration, which were deemed inflationary. He further criticized the Fed for not addressing inflation concerns stemming from federal spending under President Biden, implying a lack of accountability.

During a recent press conference, Trump conveyed his dissatisfaction with Powell, asserting that if he wanted to remove him, it could happen "real fast." While he did not explicitly state his intention to dismiss Powell, his remarks highlighted the growing tensions between the White House and the Federal Reserve regarding monetary policy. Hassett defended Trump's frustrations, advocating for a focus on economic policy rather than interpersonal conflicts. This situation underscores the complex dynamics between the executive branch and the central bank, as Trump navigates economic challenges leading up to the next election.

Weekly crypto highlight — XRP ETF coming

HashKey Capital has officially launched the HashKey XRP Tracker Fund, marking the first investment fund in Asia designed specifically to track the performance of XRP, the digital asset integral to Ripple's global payment ecosystem. This fund is aimed at professional investors and offers a unique opportunity to gain exposure to XRP without the complexities of direct asset management. Investors can subscribe through cash and in-kind options, with the fund providing monthly liquidity.

Ripple, as an early backer of the fund, is looking to enhance its strategic partnership with HashKey Capital, which already manages Hong Kong–listed spot ETFs for Bitcoin and Ethereum. This collaboration not only solidifies Ripple's presence in the Asian market, but also opens avenues for future financial products, such as the potential tokenization of a money market fund on the XRP Ledger. Fiona Murray, Ripple's Managing Director for the Asia-Pacific region, highlighted that this partnership is part of a broader strategy to introduce more regulated cryptocurrency products for institutional investors in the region, aiming to foster a more robust crypto landscape in Asia.

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Weekly Institutional Insights: Trump’s desire to fire Powell might induce volatility; XRP ETF coming

Hong Kong's Securities and Futures Commission (SFC) has approved a new Ethereum ETF with staking capabilities, allowing institutional investors to earn staking rewards.

Daily top performer — Pyth Network (PYTH)

The S&P 500 dropped 1.5% to 5,282.70 this week, down 5.9% in April and 10% year-to-date, led by tech losses. Real estate and energy outperformed, while political pressure on Fed Chair Powell and inflation concerns weighed on sentiment. Gold dipped 0.6% to $3,319 after a record high, as Powell’s stagflation warning tempered its rally. Despite the pullback, the uptrend remains intact. The Coindesk Indices, which tracks the broader crypto market, are up by 0.77%, with Bitcoin and Ether rising 0.64% and 0.72%, respectively, over the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is PYTH, up 10.1%, following the launch of Pyth Entropy for secure on-chain random number generation by Soneium.

Pyth Network (PYTH),  is a blockchain oracle system that delivers real-time crypto price data to blockchains, enabling smart contracts to react to market changes. Soneium 

 Pyth Entropy, a tool for securely generating random numbers on-chain. Two apps, HandsNFT AI and 2p2e, are already utilizing Pyth Entropy to create unpredictable and engaging experiences.

Check out the latest prices, charts, and data of 

Hong Kong's Securities and Futures Commission (SFC) has approved a new Ethereum ETF with staking capabilities, allowing institutional investors to earn staking rewards. This approval follows recent changes to local laws, with China Asset Management (ChinaAMC) partnering with OSL Digital Securities to launch the ETF by May 15. The ETF will offer exposure to Ethereum staking, transforming it from a passive investment into an active participant in the Ethereum network. The staking process is powered by Kiln, with OSL providing custody and insurance services. The rewards will contribute to the ETF's net asset value, benefiting shareholders.

Yesterday, Bitcoin spot ETFs saw $25.9M in inflows, all from non-GBTC funds, while GBTC recorded no flow.

" and a points campaign called Drops, where users can earn points—potentially leading to an airdrop—by engaging with Linera content on X. To join, sign up on 

, complete tasks like joining Discord and interacting on X, then enter the campaign. Keep engaging to earn more points, but avoid spamming.

Beginner

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Hong Kong approves Ethereum ETF with staking rewards, boosting institutional participation

Our weekly crypto derivatives analytics report delves into macro events; the current state of crypto and trading signals from spot trading volume; and futures, options and perpetual contracts.

US president Donald Trump’s tariff policies are influencing both crypto and US equities. Last week, BTC and the S&P 500 rallied due to a 90-day pause in reciprocal tariffs (excluding China). Equities are slightly below their April 9 highs, while BTC is holding above $83K. Its implied volatility term structure has normalized, and the volatility skew has improved from last week’s bias toward out-of-the-money puts, though it hasn't fully shifted toward calls.

Please check out the report’s highlights.

Tariff pause briefly brings back trading volume

Since our last report, open interest surged on Apr 9, 2025, as crypto spot prices rose after President Trump’s temporary tariff pause, accompanied by a nearly $10B increase in trade volumes. However, trade volumes have since returned to mid-March levels, and open interest has declined from the April 9 highs. The initial price spike indicates the tariff pause surprised the markets, but the subsequent pullback reflects concerns over remaining tariffs.

After being inverted for much of April due to trade policy shocks and macro headwinds, BTC’s term structure has disinverted, with front-end volatility dropping significantly this week. Call and put volumes have been balanced, with calls slightly exceeding puts most days. Apr 9, 2025, reflected mixed market sentiment, as both call and put volumes rose, but puts were higher overall. Open interest remains greater in calls, and has increased slightly since last week, reaching its highest level for the month (more than double from the beginning of April).

Despite a rally on Apr 9, 2025 that brought ETH close to $1.7K, traders sought downside protection, leading to higher volumes in put contracts as compared to calls. Since then, ETHUSDT options volumes have declined, but open interest remains strongly weighted toward calls with later expirations, which have increased since last week. After being inverted for much of April, ETH’s term structure of volatility has flattened, with volatility compressing around the 70% mark across tenors.

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Bybit X Block Scholes crypto derivatives analytics report (Apr 16, 2025): Bitcoin put bias has moderated, but not yet shifted to calls

KiloEx (KILO) is a user-friendly DEX for perpetuals trading, offering high leverage, rewards, LSTfi integration and a robust multi-chain ecosystem.

 trading is one of the most lucrative areas for cryptocurrency enthusiasts if you know how to navigate the sometimes complex world of these contracts. Unlike standard futures, perpetual futures contracts have no expiration date, allowing traders to hold onto their positions as long as they prefer. You only exit a crypto perpetual (or “perp”) contract when you feel it’s the best time to execute your long or short trade. The lack of an expiration period makes these contracts attractive for traders.

Unfortunately, many crypto perpetual contract trading platforms are far from user-friendly. It seems like many perpetual crypto exchanges assume that only professional traders dabble in these contracts, and along with that assumption goes a second one — that these pros can navigate even the most complex user interfaces. As a result, finding a user-friendly perps platform is a challenge in the world of crypto trading.

 (DEX) that aims to change the status quo by providing a user-friendly environment for traders. Its platform also offers high leverage ratios, integration into the wider liquid staking token finance (LSTfi) ecosystem and generous reward programs for referrers and affiliates.

Thanks to its numerous benefits, this DEX caters to the needs of traders at all levels of expertise who are interested in crypto perpetuals. Operational since mid-2023, KiloEx launched its native token, KILO, in March 2025 to further enhance its platform's reward, staking and governance mechanisms.

 (BNB) that specializes in crypto perpetual futures trading.

 The platform prides itself on offering a user-friendly interface, high 

 ratios of up to 100x, multi-token vaults with generous APYs and a number of reward programs for referrers and affiliates.

Co-founded by Joey Ni (CEO) and Charles Gong (COO), KiloEx was originally launched on BNB Chain's mainnet in June 2023. As of mid-April 2025, the platform has additionally expanded its service coverage to five 

 (B2). This coverage allows KiloEx to access the ecosystems of three leading blockchain platforms — 

Manta, Base and Taiko are Ethereum-focused Layer 2 solutions, while opBNB is an efficient and low-cost optimistic rollup for the BNB Chain, while B

 is a platform linked to Bitcoin that acts as a major Bitcoin DeFi (BTCFi) enabler.

Because it’s a BNB-native platform, KiloEx's industry footprint is most notable within this blockchain's broader ecosystem. In fact, as Apr 17, 2025, KiloEx is the top DEX on the opBNB network by 

Using Layer 2 chains allows KiloEx to offer its users fast and low-cost transactions, which isn't always possible on a typical Layer 1 network. It's true that BNB Chain, the primary Layer 1 used by KiloEx, generally has much lower gas fees than Ethereum, the industry's leading 

 chain that’s notorious for its exorbitant costs. However, KiloEx's partner Layer 2 networks help drive costs and transaction times even lower. BNB Chain's current average gas fee is slightly over $0.10, while the opBNB Layer 2 rollup's comparable fee is only about $0.005.

In 2024, the platform introduced one of its most innovative features — the 

, which allows liquidity providers to stake multiple assets to earn high yields. That same year, KiloEx significantly expanded its partnership network, becoming an active player in the LSTFi ecosystem. LSTFi is a new stream within the DeFi industry that allows you to use 

 (LSTs) on various protocols for additional yield.

Having solidified its market presence in 2024, the project launched its native token, KILO, in March 2025. However, in mid-April 2025, KiloEx 

 and halted trading on April 15 as a risk management measure, pending investigation of the damage.

The Hybrid Vault is among the most innovative features offered by KiloEx. Essentially, it acts similarly to liquidity pools on other exchanges. Liquidity providers can contribute their crypto funds to the vault to support trading activity on the DEX and earn interest on their contributions, based on the fees earned by the protocol.

You can contribute a mix of coins to a KiloEx vault. Supported assets include 

Depending upon trading activity and the mix of coins contributed, you can earn APYs as high as 30%, making KiloEx one of the most lucrative choices for liquidity providers in this niche.

KiloEx uses a health factor calculation for this type of vault to keep your funds and the entire ecosystem safe. Based on the health factor score of your contribution to the vault, your funds could be liquidated if their value drops dangerously low.

Discounts are also offered for fixed-term deposits for established assets, such as USDT and USDC. Withdrawals for the fixed deposits are processed upon maturity, while all other withdrawals are processed within one to three "epochs," with each epoch on the platform lasting about three days. Thus, depending upon your contributed funds, you’ll wait anywhere from three to nine days to receive your crypto back.

The KiloEx platform also runs a generous referral program under which you can earn rewards for referring your friends to the platform. The amount you earn depends upon the trading volumes generated by the people whom you’ve referred. Additionally, your referees to the DEX can also benefit from fee rebates, again depending upon the volume of trade they generate.

There’s a tiered system, comprising nine levels, based on which you and your friends earn commissions and rebates. Under this system, even those referred traders whose monthly volume is at the lowest level (below $5,000) can still benefit from 5% rebates, while you also earn a 10% commission.

The table below shows the structure of this referral system with percentages for commission and rebates based on monthly trading volumes.

KiloEx offers an affiliate program for key opinion leaders (KOLs) with a certain level of social media following and influence in the crypto market. KOLs may apply to join the program by filling out an application, which is then considered by the project team within 48 hours.

To qualify for affiliate status, a KOL must have: 

Approved affiliates are provided a link to the platform, and are encouraged to invite their followers to trade on the KiloEx. If they invite at least five followers who trade at sufficient levels, the affiliates can start earning their commission. KOLs can earn up to 55% commission, depending upon the referred followers' trading activity.

KiloEx’s native utility token, KILO, is a 

 asset launched on BNB Chain. It’s used on the platform for governance, fee discounts on trades, rewards via 

, liquidity provision incentives and staking.

KILO is a supply-capped asset, with a maximum and total supply of 1 billion. The token’s supply allocation shares are shown in the chart below.

xKILO is an escrowed version of the KILO token. You can convert KILO to xKILO at a fixed rate of 1:1. The primary utility of xKILO is to provide boosted liquidity provision, which makes it possible to receive staking rewards. By locking xKILO on the platform, you can access special discounts and other benefits reserved for VIP-level users. Holding xKILO also grants you governance power to vote and influence the platform's future direction.

Unlike KILO, xKILO is nontransferable and isn’t tradable on the secondary market. The only ways to obtain xKILO are either to buy it with KILO or receive it via airdrops.

Platform users can earn points to qualify for KILO airdrops. Typically, you accumulate points by trading, depositing funds, referring others to the DEX, checking in to the platform and completing other specified eligible activities.

The project’s initial airdrop, Genesis Season, had an eligibility snapshot taken back in July 2024. Under the currently running airdrop campaign, Pioneer Season, users can earn points to receive KILO tokens for 180 days past the token generation event (TGE) in late March 2025 (i.e., until late September 2025).

Additionally, you can earn KILO tokens on Bybit simply by participating in the 

 event and holding BNB in your account. Every day at various random times, Bybit will take snapshots of your BNB holdings in your Funding and Unified Trading Accounts to calculate the number of KILO tokens you’re eligible for. The campaign will run through Apr 25, 2025, 11:59PM UTC, and you’ll have your share of KILO airdropped seven days after this date.

 market as a swap pair with USDT. If you don't have a Bybit account, you can easily 

, and access opportunities across hundreds of trading pairs and crypto products on the exchange's Spot and Derivatives markets.

As of Apr 17, 2025, the KILO token is trading at $0.039, which is 76.2% lower than its ATH of $0.1648 on Mar 27, 2025, and 17.3% higher than its ATL of $0.03344 on Apr 12, 2025.

Long-term price forecasts for KILO are mostly bullish. CoinCodex 

 at $0.0387 in 2027 and then rise to $0.135 in 2030 while PricePredictions 

When it comes to perpetuals trading, both traditional 

 (CEXs) and DEXs have often struggled to offer an intuitive trading experience. In contrast, KiloEx has made user-friendliness a cornerstone of its operations. With KiloEx, you can enjoy a streamlined trading process, access market trends info for thorough research, get an overview of the cryptocurrency market and conduct other activities via an interface that’s designed for anyone, irrespective of their familiarity with decentralized trading.

The platform also boasts a diverse range of other benefits not easily found in the world of perpetuals-based cryptocurrency trading — generous leveraged trading options, trading fee discounts, lightning-fast trades, low trading fees and an innovative Hybrid Vault system. Many of these benefits are thanks to KiloEx's collaboration with several Layer 2 decentralized platforms, which provide the technical infrastructure to enable low costs and fast order processing.

If you’re a crypto perpetuals enthusiast, KiloEx is definitely a platform to peruse.

Intermediate

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KiloEx (KILO): More than a DEX — a rewarding ecosystem

Bybit Learn

DeFi

Solend is a decentralized lending protocol running on the Solana network. Find out everything about it including its near crash in this detailed article.

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 has been garnering the market’s attention. An algorithmic, decentralized protocol for lending and borrowing built on Solana, Solend opened gateways for Solana users to increase the methods they can employ to profit from the market. With prominent investors such as 

 and many others, Solend gained remarkable traction, achieving 

 just over a month after launch, achieved even prior to liquidity mining opportunities. 

In late June 2022, Solend once again grabbed the front page of several financial news sites. However, this time the reasons weren’t as favorable. Concerns regarding the liquidation of a whale account on Solend left Solana users panic-stricken about a potential major crash, sparking intense discussions. 

In this article, we’ll explore what Solend is, how a major crash almost occurred, and the impact it’s suffered from FTX’s downfall.

, using an algorithmic method to determine interest rates and collateral amounts. 

 in August of 2021. At that time, Solana’s popularity was increasing due to its speedy transactions and low fees. The addition of a lending protocol to the Solana ecosystem attracted a lot of market interest. Users can now earn higher returns than before.

Solend starts with a fairly basic premise: Users can deposit assets to their Solend accounts to earn interest. They can also use these deposits as collateral to take out loans. The platform’s main goal is to decentralize lending. 

Borrowers don’t need to take out a formal long-term loan, or justify their need for it. Instead, the platform enables them to take short-term loans with simpler deposits and no lengthy underwriting process. 

 automatically assign lending limits and collect interest.

In order to use Solend, users need to have a Solana 

. The SOL crypto asset is the backbone of this Solana-based lending protocol. Users can move to different denominations if they want, but SOL is the native currency for the platform. Solend has various "pools" of available crypto assets that operate with different currencies. For example, the 

 lets users work with all 20 of the crypto assets the platform currently supports.

Once users have their Solana wallet connected to the lending platform and they’ve added SOL to their account, they can begin borrowing or lending various types of crypto. The 

 option lets users look at how much interest they can earn, while the 

 option tells users how much they can borrow with their current crypto stake.

Each loan that users take has a liquidation threshold. If crypto values alter in a way that causes the loan to cross the liquidation threshold, users’ assets can be liquidated. The funds then go to the lenders as collateral for the loan.

There are many other similar DeFi lending platforms, such as 

, but Solend’s Solana-based lending protocol has some special features that set it apart.

Many users find Solend helpful for investing because it has low transaction fees. You can quickly borrow and sell crypto without getting hit with excessive transaction fees. Most of the platform's fees are just protocol fees you pay with each loan. These fees contribute to an insurance fund for the platform. 

, though it can vary slightly depending on which vault you use. There are also fees you pay for any Solana network transactions. The first time you interact with the network, you pay a 0.01 SOL fee. Then, for every subsequent transaction, you pay a low fee of around 0.000005 SOL. These fees are much cheaper than transaction fees on most other sites.

Unlike many other lending platforms, Solend prioritizes scalability. It doesn't require users to stick with one type of crypto, or conduct only low-level transactions. Users can leverage a wide range of crypto assets, with more being added to the platform regularly. You can choose from a variety of cryptocurrencies, such as native coins, stablecoins and meme coins, so there’s certainly a lot of versatility.

Despite Solend’s many features, its network isn't confusing to use. One of its most impressive aspects is its streamlined dashboard. Well-organized and visually pleasing, it’s intuitive to use. Most people can get started without requiring extensive tutorials, or confusing statistics that can cause investors to make errors.

A lot of Solend's success may be linked to its 

, which the network launched so that current users can encourage others to sign up through a referral link. The original user receives a small financial bonus when a new user participates. Right now, the financial incentive is set to 20% of each loan's origination fee.

Though the platform has some great perks, using it also comes with some potential problems. Before investing in any Solend strategies, there are a few risks you need to be aware of.

Solend’s liquidations are powered by the price feeds of 

 may report incorrect prices, causing wrongful liquidations to occur.

Given that Solend is an algorithmic, decentralized protocol, the crux of its operating system lies in smart contracts that facilitate the borrowing and lending of crypto assets. However, like any other type of software, these contracts can be a point of vulnerability. They could, for instance, potentially be exploited to steal or permanently freeze funds. 

Note that such risk is inherent to all smart contracts. Despite the fact that this risk cannot be fully eliminated, there are some methods and steps taken to mitigate it:

Solend’s smart contract has undergone a code audit by 

, which pays up to $1 million if a user identifies a critical vulnerability in the code. This incentivizes responsible disclosure instead of hacking.

Solend’s treasury of $20 million can be used as insurance for the Main Pool, should any exploits or hacks cause any of the protocol’s funds to be lost.

Solend's lending protocol only works when users are depositing crypto assets for others to borrow. If there are no crypto assets left in the pool — which would be the case should 100% of the crypto asset be lent out — any future withdrawal or borrowing becomes impossible. This is called 100% utilization, and it can occasionally be an issue.

This problem is resolved as long as users pay back their loans, or more users supply crypto assets to the pool. 

Solend offers over-collateralized loans, meaning that each loan the platform offers must be backed by collateral that’s worth more than the loan itself. However, collateral value is constantly shifting. 

 may determine that your loan is below the threshold. At this point, you can either add more collateral or let your existing collateral be liquidated. However, liquidating your position incurs a penalty. If you aren't paying close attention to your loans and investments, there's a chance you could end up accidentally losing your loan — and having to pay the liquidation costs.

People who lend on Solend’s platform may potentially run into situations where their loans cannot be covered. This can happen during large-scale liquidations or periods of market turmoil. When a lot of assets are liquidated at once, their worth may not be enough to cover the user’s loans, resulting in a negative balance known as bad debt that can harm the lender. 

 to isolate newer or riskier crypto assets. These pools are used to screen crypto assets that have less liquidity and higher volatility, which creates an exploitable opportunity and is deemed a risk for the main pool. In addition, deposit limits and collateralization ratios are also managed for this group of crypto assets.

Any bad debt created is filled via the insurance fund. However, this insurance fund is topped up by transaction fees, a source which isn’t limitless and can potentially run out.

In 2022 alone, Solend has faced multiple tough situations, partly due to the volatile market conditions and the fallout from big institutions failing, which has caused various crypto assets to suffer in price. Here are the three main issues that Solend has had to deal with.

On November 2, 2022, Solend was struck by an oracle exploit, resulting in $1.26 million in bad debt.

Three of its pools — Stable, Coin98 and Kamino USDH — were affected, since the exploit revolved around the 

 (USDH). As a result, these three pools have been disabled, and the exploiter’s address has been made known to exchanges.

FTX’s Downfall and Its Impact on Solend

CEX, has thrown the market into turmoil. Given that the Solana ecosystem had close ties with Sam Bankman-Fried (SBF), the founder of FTX, the 

 (TVL) of the DeFi ecosystem has taken a beating, partly attributed to the free-falling price of SOL.

There’s also been an impact on Solend, which had a TVL of over $280 million on November 2 and has since dropped all the way down to $28 million at the time of this writing (Nov. 23, 2022). This is a result of users withdrawing from the protocol, as well as the 

In addition, Solend was faced with an issue pertaining to the liquidation of a whale account. An unidentified whale who had borrowed $44 million against $51 million worth of SOL had to be liquidated, due to the drop in value of SOL collateral. However, on-chain SOL liquidity had taken a huge beating when the price plummeted 43% in 48 hours, and Solend had difficulties liquidating the whale’s account.

In an attempt to attract depositors and incentivize borrowers to repay their loans, thereby improving liquidity, the team at Solend tried to resolve this situation by raising the interest rate on SOL to more than 2,500%. In addition, they also created a Binance account to process the SOL liquidations, since the SOL liquidity was deeper on Binance as compared to the Solana chain itself.

Despite the commendable efforts from the Solend team, which expedited the liquidation of the whale account, Solend now sits with a bad debt of $6.5 million. As Soju, Head of Business Development at Solend, wrote in Solend’s Discord channel, “It’s looking very bad now” as the situation had yet to be fully resolved.

Prior to FTX’s downfall, Solend had encountered difficulties with regard to another whale liquidation in late June 2022. This particular incident took the DeFi space by storm, was intensely discussed by the Crypto Twitter community and appeared in news stories.

One of Solend's key vulnerabilities is that users join together to create a lending pool. This can lead to problems when a single borrower, called a 

, has an outsized presence within the Solana-based lending protocol. The June crash involved a 

 borrower who had an outstanding loan of $108 million worth of USDC and USDT. The borrower's stablecoin loan was backed by $170 million worth of SOL in their Solana wallet.

The whale's loan was the largest single-user loan on Solend, taking up a huge portion of the lending pool. This was fine — as long as SOL prices were high. However, when SOL prices started tanking around June 15, this huge loan became a problem. SOL prices were dropping to $27, so the whale's loan was quickly approaching its liquidating threshold.

Solend’s Developers Try Notifying the Whale

When Solend's developers noticed this issue, their first plan was to notify the lender of the impending liquidation. At this point, another one of the platform's vulnerabilities became apparent: Solend is entirely anonymous, so there’s no way to contact a user — outside of sending a message to their account. Unfortunately for the developers, the whale wasn't checking the messages sent to their own account.

If SOL's price were to reach $22.30 without the whale taking any action, their collateral would have to be liquidated, resulting in over $21 million of SOL being dumped at one time. Users feared a serious amount of fallout for the market. Though SOL is a fairly robust blockchain, with a market cap of around $11 billion, such a huge sale would have caused its value to tank even further.

It was a race against time, with the group desperately trying to notify the lender before the liquidation was set in motion. After private methods of contact failed, they turned to the internet. The developers posted on Reddit and Twitter, begging the borrower to contact them. They even sent an on-chain transaction with a memo, asking the whale to talk to them about the issue. Of course, making the issue public caused further problems. Users were spooked and started to pull their funds, resulting in fewer tokens in the pool and more funds being frozen.

Eventually, Solend was able to use an intermediary to contact the whale and get them to add more collateral to their account. However, before this took place, the platform had been seeking other solutions. They ended up enacting their first 

 (DAO) vote. This essentially required users to join together and vote on proposed solutions to the problem as described below.

Proposal 1: SLND1 — Mitigate Risk From Whales

Solend's first proposed measure was an "emergency powers" package. Named 

, it would have given Solend’s developers more control over users' accounts, allowing the platform to identify whales who represent more than 20% of the borrowing in any given pool. Solend would then have emergency power to take over these accounts in the event of any liquidation. The platform would be able to liquidate the account more slowly, so that lenders would get paid but SOL shares wouldn’t get dumped 

. At the time, this proposal was met with a lot of favor. Solend got just enough voting participation to meet their 1% quorum requirement, and the emergency ballot passed by 97.5%. 

However, users quickly found out that some unsavory dealings had been going on behind the scenes: Struggling to achieve enough user participation to reach a quorum, the platform found a user who owned over 1% of all the turnout tokens. This user’s outsized number of votes swayed the results of the election, while many members of the Solend community had been outspoken about how much they disliked the measure. They felt that it gave the platform too much control over individual users’ accounts, contesting the ethos of decentralization.

Proposal 2: SLND2 — Invalidate SLND1 & Increase Voting Time

Since there was so much public outcry over SLND1, the developers proposed a new measure, 

, which would essentially reverse everything that had been agreed to with SLND1. The new measure proposed both to cancel the idea of giving the Solend team more power over user accounts, and to increase the overall voting time.

This ballot ran into a similar problem as the first proposal. Once again, users were divided, and it mostly came down to the input of the same user, with their outsized voting power. This user initially said they would vote "No" on SLND2, because they didn't want to cave to public pressure. However, at the last minute, they decided to vote "Yes” and the proposal passed. The platform was no longer allowed to access user accounts in an emergency, while users were given more time on future votes.

Proposal 3: SLND3 — Introduce Account Borrowing Limit

After the first two controversial votes, Solend users were becoming fairly anxious. Fortunately, the platform was able to finally get in contact with the whale and work to resolve the ongoing situation. While this was happening, the team also began to work on a new proposal that would hopefully reduce the risks of another such occurrence.

’s ballot measure proposed to reduce borrowing limits for all users. The proposal suggested that, in the future, there should be a borrower ceiling of $50 million. This would hopefully prevent one borrower from being able to take up so many funds from a lending pool. The ballot passed on June 21, and the proposed limit went into effect. Though there was once again the issue of a single user deciding the vote, there was less public outcry because most people believed the new measure was a wise decision.

It's hard to clearly define Solend's effect on SOL, since the two are so closely related. SOL was definitely on the downturn before the lending protocol disaster. In fact, the Solana network crash was the main reason that all of the whale's SOL collateral was almost liquidated in the first place. 

During the days of constant, contradictory proposals, market uncertainty continued to drive SOL prices down. Many investors dumped their SOL out of fear that its value was about to drop further. However, even when the near crash was prevented, as a portion of the whale’s debt was moved to another protocol, the price of SOL didn’t immediately recover. It appeared that stabilizing Solend had prevented a bigger crash, but was unable to improve Solana’s ecosystem as a whole. 

The situation with Solend highlighted some key problems with the protocol. Many investors are now wary of lending to users, as the whale issue highlighted just how easily one bad call could destabilize any lending pool. It’s somewhat reassuring to see that the developers were able to handle things, and to keep users from losing money. However, if there’s a reoccurrence, the outcome may be very different. Despite the newer borrowing limits, there still isn't much regulation in place to prevent the same problem from happening again.

That said, there's no indication that borrowing on the platform or using it to leverage cryptos against each other is potentially disastrous. These sorts of activities don't necessarily run the same risk of drastic harm from a single large liquidation. However, the June 2022 crash did cause a limited lending pool. This could be a problem for investors whose plans involve acting quickly and constantly taking out various loans.

In addition to the practical issue of one whale borrower bringing things to a halt, the June crash also introduced some philosophical problems. Many investors had been drawn to the lending protocol because it claimed to be a DeFi program in which financial decisions weren't based on human error. 

However, all of the SLND proposals ended up coming down to a single user whose votes were heavily influenced by both the developer team and the Twitter outrage. The ability of one voter to purchase so much power shows that Solend may end up being influenced by personal bias and real-world politics just as much as the traditional financial system it criticizes.

SLND’s price has dropped by roughly 97% since its peak in November 2021. Given the current volatile market conditions, and potential contagion effects that could arise from FTX’s fallout, users should be careful when deciding whether to invest in SLND.

Ultimately, Solend’s decentralized lending and borrowing protocol has some exciting features. However, the recent near-crash shows the potential dangers of DeFi lending platforms. Despite claims that Solend’s program is decentralized and algorithmic, it ended up relying entirely on user behavior. Since it's lacking in regulations, this opens up vulnerabilities that can cause real financial damage. Solend’s lending protocol is certainly intriguing to tinker around with, but we'd recommend caution when working with large amounts of funds.

What Is Solend and How Did a Near Crash Almost Cripple It?

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