The two major lending leaders of Solana have fallen out, and the foundation has stepped in to mediate

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OdailyNews

2025-12-08 21:10:20

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Stop arguing, or Ethereum will take advantage of it!

Author: Azuma, Odaily Planet Daily

This past weekend, the two lending giants on Solana, Jupiter Lend and Kamino, "clashed."

Note: Defillama data shows that Jupiter and Kamino are currently the two protocols with the highest TVL in the Solana ecosystem.

Cause of the Incident: The Tweet Deleted by Jupiter

The incident can be traced back to August of this year, when Jupiter's official account emphasized multiple times that its lending product, Jupiter Lend, has the characteristic of "risk isolation" (the related posts have been deleted) before its launch, meaning that there would be no risk cross-contamination between different lending pools.

However, the design of Jupiter Lend after its launch does not conform to the market's common understanding of the risk isolation model. In the general market perception, a DeFi lending pool that can be called risk-isolated is a structure that divides the risks of different assets or markets through design mechanisms, preventing a single asset default or a market collapse from affecting the entire protocol. The main characteristics of this structure include:

Pool Isolation: Different asset types (such as stablecoins, volatile assets, NFT collateral, etc.) are allocated to independent lending pools, each with its own liquidity, debt, and risk parameters.
Collateral Isolation: Users can only use assets within the same pool as collateral to borrow other assets, cutting off cross-pool risk transmission.

However, in reality, Jupiter Lend's design supports re-collateralization (reusing collateral deposited in other parts of the protocol) to improve capital efficiency, which means that the collateral deposited in the vaults is not completely isolated from each other. Samyak Jain, co-founder of Jupiter, explained that the lending pools of Jupiter Lend are "isolated in a sense" because each pool has its own configuration, limits, liquidation thresholds, liquidation penalties, etc. The re-collateralization mechanism is only to better optimize capital utilization efficiency.

Although Jupiter has a more detailed explanation in its product documentation about Jupiter Lend than in its promotional content, objectively speaking, the mention of "risk isolation" in its early promotion does indeed deviate from the general market understanding and carries a suspicion of misleading.

The Battle Erupts: Kamino Launches an Attack

On December 6, Kamino co-founder Marius Ciubotariu took the opportunity to criticize Jupiter Lend and banned the migration tool from Kamino to Jupiter Lend.

Marius stated: "Jupiter Lend repeatedly claims that there is no cross-contamination between assets, which is completely absurd. In fact, if you deposit SOL and borrow USDC in Jupiter Lend, your SOL will be lent to other users who are using JupSOL and INF for circular lending, and you will bear all the risks of these circular lending collapses or asset explosions. There are no isolation measures, and there is complete cross-contamination, which is contrary to the advertising and what people have been told… In both traditional finance (TradFi) and decentralized finance (DeFi), whether collateral is re-collateralized and whether there are contagion risks are important pieces of information that must be clearly disclosed, and no one should make vague explanations about this."

After Kamino's attack, discussions surrounding the product design of Jupiter Lend quickly ignited the community. Some agree that Jupiter is suspected of false advertising ------ for example, the CEO of Penis Ventures, 8bitpenis.sol, fumed that Jupiter has been lying to users from the very beginning; others believe that the design model of Jupiter Lend balances safety and efficiency, and that Kamino's attack is merely for market competition with impure motives ------ for instance, overseas KOL letsgetonchain stated: "The design of Jupiter Lend achieves capital efficiency of the pool model while also possessing certain risk management capabilities of modular lending protocols… Kamino cannot stop people from migrating to better technology."

Under pressure, Jupiter quietly deleted its early posts, but this triggered a larger scale of FUD. Subsequently, Jupiter's COO Kash Dhanda also came forward to admit that the team's previous claim on social media about Jupiter Lend's "zero contagion risk" was inaccurate, and apologized, stating that a correction should have been issued alongside the deletion of the posts.

Core Contradiction: The Definition of "Risk Isolation"

In summary of the current community's opposing attitudes, the essential divergence seems to lie in the different definitions of the term "risk isolation" by different groups.

From the perspective of Jupiter and its supporters, "risk isolation" is not a completely static concept, and there can be some design space within it. Although Jupiter Lend is not the risk isolation model commonly understood, it is also not a completely open pool model. While sharing a common liquidity layer that allows for re-collateralization, each lending pool can be independently configured, with its own asset limits, liquidation thresholds, and liquidation penalties.

On the other hand, from the perspective of Kamino and its supporters, any allowance for re-collateralization is a complete denial of "risk isolation," and as a project party, one should not deceive users with vague disclosures and false advertising.

Upper-Level Awareness: Some Fan the Flames, Others Mediate

Aside from the disputes between both parties and the community, another point worth noting in this incident is the attitude of various upper-level stakeholders in the Solana ecosystem.

First is the venture capital fund Multicoin, which has the largest voice in the Solana ecosystem (seemingly without restraint). As an investor in Kamino, Multicoin partner Tushar Jain directly published a post questioning Jupiter, stating "either foolish or malicious, but either way, it cannot be forgiven" ------ objectively speaking, his remarks have greatly exacerbated the situation.

Tushar stated: "There are two possible explanations for the controversy surrounding Jupiter Lend. One is that the Jupiter team truly does not understand the meaning of isolated collateral. The handling of collateral is the most important risk parameter in a lending protocol. If they do not even understand this core principle of the lending market, what else do they not understand? Is their professional capability sufficient to reassure users to deposit funds? It is completely unforgivable for a lending protocol not to understand the meaning of isolated collateral. The other possibility is that the Jupiter team is not lacking in ability but is actively misrepresenting the core parts of its protocol to mislead users and attract deposits."

Clearly, Tushar's motives are very clear, which is to take this opportunity to help Kamino strike at its competitor.

Another important upper-level statement came from the Solana Foundation. As the parent ecosystem, Solana clearly does not want to see the two major seed players within its ecosystem overly opposed, leading to overall internal friction.

Yesterday afternoon, Solana Foundation President Lily Liu posted on X platform to call for peace between the two projects, stating: "Love you both. Overall, our lending market size is currently about $5 billion, while the Ethereum ecosystem's size is about ten times that. As for the collateral market in traditional finance, that is countless times this number. We can choose to attack each other, but we can also choose to look further ahead ------ first work together to capture market share from the entire crypto market, and then jointly march into the vast world of traditional finance.

To summarize ------ Stop fighting, or else Ethereum will benefit!

Underlying Logic: The Battle for Dominance in Solana Lending

Considering the data development and market environment of Jupiter Lend and Kamino, this incident, although sudden, seems to be an inevitable collision that was only a matter of time.

On one hand, Kamino (red in the chart below) has long held the position of the lending leader in the Solana ecosystem, but Jupiter Lend (blue in the chart below) has captured a significant market share since its launch, becoming the only entity currently capable of challenging the former.

On the other hand, since the major market crash on October 11, market liquidity has tightened significantly, and the overall TVL of the Solana ecosystem has continued to decline; coupled with multiple project explosions, the DeFi market has become extremely sensitive to "safety."

When the market environment was good and incremental funds were abundant, Jupiter Lend and Kamino were relatively harmonious, as there was still profit to be made, and it seemed that they would only earn more… But as the market shifted to a stock game, the competitive relationship between the two sides became more tense, and safety issues happened to be the most effective point of attack ------ even though Jupiter Lend has not had any security failures historically, the mere suspicion in design is enough to alert users.

Perhaps from Kamino's perspective, now is the perfect opportunity to deal a heavy blow to its opponent.