In a series of tweets and subsequent clarification, Venus Protocol, a decentralized finance (DeFi) lending platform, addressed concerns related to the potential liquidation of Binance’s BNB ecosystem following recent price fluctuations. Venus Protocol assured the community that measures were in place to protect misappropriated assets and prevent any further sell-off from impacting its platform.
BNB Chain’s Governance Proposal
Venus Protocol’s tweet, shared earlier today, highlighted a governance proposal submitted by BNB Chain in November 2022. This proposal, which was successfully passed by the community, enabled the whitelisting of the liquidation of the BNB Bridge exploiter’s position exclusively to the BNB Chain core team. The primary objective was to safeguard the misappropriated assets and minimize any adverse consequences resulting from further liquidation.
The whitelisted wallet was initially endowed with $30 million in USDT, with the explicit purpose of preventing a shortfall on the Venus platform. It aimed to provide additional support through a mechanism approved by Venus governance. The move was seen as a proactive measure to counter the potential impact of BNB’s falling price on Venus.
However, Venus Protocol deleted a previous tweet that conveyed the readiness of the BNB Chain core team to assume control over the BNB position on Venus if the token’s price reached the liquidation threshold. The tweet further mentioned that a liquidator address had already prepared $30 million to refund account loans, with the assurance that no BNB would be dumped into the market and no shortfall was expected on the Venus platform.
When questioned about the tweet’s deletion, Venus Protocol stated that a new tweet had been published to offer readers a more comprehensive context and a link to the actual governance proposal. This approach aimed to provide greater transparency and clarity regarding the mechanisms in place to protect Venus and its users.
Binance’s Regulatory Challenges
The context for these developments stems from Binance’s recent regulatory challenges. On June 5, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance, alleging violations of federal securities laws. One of the allegations claimed that BNB and the Binance USD (BUSD) stablecoin were securities, a charge that Binance vehemently disputed.
The resulting uncertainty surrounding Binance and the regulatory scrutiny caused a significant sell-off, leading to a decline in BNB’s price. According to DeFiLlama data, BNB would face a liquidation of approximately $200 million if its price were to drop below $220. In recent days, BNB has experienced a notable decline, falling over 24% from $310 to $228, as reported by CoinMarketCap’s data.
Given the potential impact of BNB’s continued descent, the Venus Protocol reassures its community that mechanisms are in place to address any potential liquidation and protect the Venus platform from adverse consequences. The involvement of the BNB Chain core team, combined with the transparent governance proposal, aims to provide stability and confidence during these uncertain times.
