Th Solana DeFi lender has moved its platform to withdraw-only mode, giving as the reason for this decision the current liquidity crunch and the overall shrinking borrowing and lending market. The protocol had enough runway to continue operating, but doing so would be a “gamble,” the team said Wednesday.
“Unfortunately, right now liquidity is just not there and this is so not just about Solana and the B/L market (on which Everlend is 100% dependent) keeps shrinking. In these conditions pressing forward is a gamble. And even though we had enough runway, we decided to stop now,” Everlend’s announcement reads.
The app will continue to operate until all customers’ assets are fully withdrawn. Everlend’s team will cover all raised and unused funds, along with payments to third-party contractors, within the next two weeks. The project also said that its codebase will be open-sourced, so anyone can continue the work using its technology stack.
“It was a very tough decision to make, it took us a month to try and explore any options for going forward. The team still thinks that Everlend is an excellent product that will one day become very handy and Solana is the most efficient chain for its implementation,” the team said in a farewell thread.
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Founded in 2021 and headquartered in Kyiv, Ukraine, Everlend raised a $2.6 million seed round in August 2022 from backers GSR, Portico Ventures, Everstake Capital, and Serum. At its all-time high, Everlend controlled almost $400,000 in total value locked, as per data from DefiLlama. At the time of writing, the project’s TVL stands at $45,500, down 35% over the last 24 hours.
Solana is bleeding after the FTX fallout
FTX’s swift demise left Solana in the deep red, as its TVL plummeted from $1 billion down to a mere $270 million and native token SOL dumped from $35 to $11 (now rebounded to $25). The primary reason for such a drastic drop is obvious — Solana was heavily intertwined with FTX and SBF, to such an extent that its core decentralized exchange and main liquidity provider Serum had its private keys housed within FTX.
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“The Serum program update key was not controlled by the SRM DAO, but by a private key connected to FTX,” Serum’s anon dev Mango Max tweeted on November 12. “At this moment no one can confirm who controls this key and hence has the power to update the Serum program, possibly deploying malicious code.”
Given a possibility that Serum keys might have been compromised in an alleged November 11 FTX hack, devs coordinated a fork of the protocol called OpenBook, free of any ties with the now-disgraced Bankman-Fried. Still, the damage inflicted on Solana’s DeFi seems, for now, irreversible — many leading DApps, including NFT marketplace Magic Eden and Phantom wallet, have dropped support for Serum, and SOL investors are spooked by the fact that FTX and Alameda held nearly 11% of token supply.
However, some Solana believers say that it may be too early to write off the entire blockchain. According to W3T founder Alex Valaitis, Solana still has a large treasury (around 30 months of runway left), a strong developer community, a burgeoning NFT scene, and high network activity.
Read also: Solana Price Prediction 2023. Should I buy SOL?
“The reality is that we are still in the early innings of crypto. Therefore, it would be a mistake to write off Solana at this stage. It has a lot of key foundations in place & could see a resurgence similar to Ethereum saw after 2018,” Valaitis summarized.
