3 ms·
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 Solan
by heartbeats 4y ago
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.