I would like to start the conversation with regards to the recent Solend situation.
I don’t think it’s productive to focus on criticizing the Solend team are community. What I think would be productive is to discuss how Jet should respond should we find ourselves in a similar situation.
Thank you for opening up this discussion. Loved reading through @jrmoreau’s thread too.
Because market conditions can change so quickly, I think we can all agree that it’s important to have a well-thought out plan in place for situations like this. Leaders of “Web2” companies spend countless hours thinking about business continuity and risk management, so why shouldn’t we do the same?
Other big learning from this situation is that governance should never just be an afterthought. Jet is absolutely crushing it here!
Agreed. The main issues with Solend’s response was that the DAO was spun up in like 9+/- hours I believe. There was little time to vote, and so although you could argue it was a ‘community’ decision it felt very ad hoc. There was also an incentive given to SLND holders who voted, and it just felt like Solend got a big case of the yips. I understand that if I were in that position it would not be so easy to be patient, but with no bottom in sight they felt a need to act quickly due to the whole game theory of crypto in general. Also the other issue seemed to be the fact that they identified the liquidation problem rather late. I like the Solend team, it just felt like it was part rush to save the protocol, and part ‘sometimes you get to be the example of a problem in crypto’. Perhaps James or Wil can chime in with any ideas on if whale positions can be mitigated by early detection algos. As in "Oh hey we have a few whales on here now, what would this look like at a 90% draw down’ and then plan accordingly.
The issue at heart is that governance should not be able to vote away a user’s funds and there should be multiple layers of abstraction and emergency measures ahead of something like this occurring to prevent it from becoming an emergency. We talked this through a week ago and it seems having a more robust framework around liquidators could also help. We’re doing some research on this now and will share when finished.