Earlier today, Altcoin Daily tweeted that Solana (SOL) is at risk of hitting $0 today.
One of the first possible causes for this is the fact that Solend, the largest lending market on Solana, is facing a “crippling” liquidation of about $170 million SOL that could potentially crash the network.
Altcoin Daily explained in a YouTube video why Solana is at the risk of tapping $0. In detail, a whale deposited 5.7 million SOL and borrowed 108 million USDC and USDT. This accounts for a huge percentage chunk of borrowing on Solana, and now this position is under a liquidation threat.
Moreover, the problem is that such a large liquidation in an illiquid market and unstable network like Solana can have very damaging consequences.
Many people believe that they know who the whale is and there have been attempts to contact the whale in order to get them to restructure the loan, but so far, these attempts seem to be unsuccessful.
The video went on to say that this liquidation could cause chaos, putting even more strain on the Solana network. Liquidators will now be especially active and will probably overuse the liquidation function. This could cause even more problems as the liquidation function is known to be a factor that caused Solana to go down in the past.
Importantly, the Solana network has already been down seven times over the last 12 months. The issue of investor trust also comes into play as Solana is proposing to literally steal the user’s funds and execute OTC trades. This makes one question the promise of decentralization.
Solana is currently the 9th most valuable crypto in terms of market cap and is currently worth $32.11 after a 9.30% increase in price over the last 24 hours.
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Source: Cryptocurrency - investing.com
