Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
This past weekend, the two leading lending protocols on Solana, Jupiter Lend and Kamino, got into a public spat.
- Odaily Note: Defillama data shows that Jupiter and Kamino are currently the two protocols with the highest TVL in the Solana ecosystem.
Origin of the Incident: The Tweet Jupiter Quietly Deleted
The origin of the incident can be traced back to August of this year. At that time, during the pre-launch promotion of its lending product Jupiter Lend, Jupiter's official account repeatedly emphasized that the lending product had a "risk isolation" feature (related posts have been deleted), meaning there would be no cross-contamination of risks between different lending pools.
However, the actual design of Jupiter Lend upon launch did not align with the market's common understanding of a risk isolation model. In the general market perception, a DeFi lending pool that can be called risk-isolated is a structure that, through design mechanisms, separates the risks of different assets or markets from each other, preventing a single asset default or a market crash from affecting the entire protocol. The main features of this structure include:
- Pool Segregation: 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.
But in fact, Jupiter Lend's design supports rehypothecation (reusing deposited collateral elsewhere in the protocol) to improve capital efficiency, meaning the collateral deposited into the vaults is not completely isolated from each other. Jupiter co-founder Samyak Jain's explanation for this was that Jupiter Lend's lending pools are isolated "in a sense" because each pool has its own configuration, caps, liquidation thresholds, liquidation penalties, etc., and the rehypothecation mechanism is merely to better optimize capital utilization efficiency.
Although Jupiter's product documentation for Jupiter Lend provides more detailed explanations than the promotional content, objectively speaking, the "risk isolation" mentioned in its early promotions did have a certain deviation from the market's common understanding, creating a suspicion of misleading users.
Escalation: Kamino Launches an Attack
On December 6th, Kamino co-founder Marius Ciubotariu seized this opportunity to publish a post criticizing Jupiter Lend and blocked Kamino migration tools to Jupiter Lend.
Marius stated: "Jupiter Lend repeatedly claims there is no cross-contamination between assets, which is complete nonsense. In reality, in Jupiter Lend, if you deposit SOL and borrow USDC, your SOL will be lent out to other users engaging in recursive farming using JupSOL, INF, etc. You will bear all the risks of these recursive farms collapsing or the assets crashing. There is no isolation here; there is complete cross-contamination, contrary to what was advertised and what people were told... In both traditional finance (TradFi) and decentralized finance (DeFi), information about whether collateral is rehypothecated and whether there is contagion risk is material information that must be clearly disclosed, and no one should offer vague explanations for it."
After Kamino's offensive, discussions surrounding Jupiter Lend's product design quickly ignited the community. Some agreed that Jupiter was涉嫌虚假宣传 (suspected of false advertising) — for example, Penis Ventures CEO 8bitpenis.sol angrily accused Jupiter of blatantly lying from the start and deceiving users; others believed that Jupiter Lend's design model balanced safety and efficiency, and that Kamino's attack was merely for market competition with impure motives — for example, overseas KOL letsgetonchain stated: "Jupiter Lend's design achieves the capital efficiency of a pooled model while incorporating some risk management capabilities of modular lending protocols... Kamino cannot stop people from migrating to better technology."
Under pressure, the Jupiter team quietly deleted the early posts, but this triggered even larger-scale FUD. Subsequently, Jupiter Chief Operating Officer Kash Dhanda also came forward to admit that the team's previous social media claims of "zero contagion risk" for Jupiter Lend were inaccurate and apologized, stating that a correction should have been issued simultaneously with the deletion of the posts.
Core Contradiction: The Definition of "Risk Isolation"
Summarizing the current opposing attitudes, the fundamental divergence seems to lie in the different definitions different groups have for the term "risk isolation."
From the perspective of Jupiter and its supporters, "risk isolation" is not a completely static concept; there can be some design flexibility within it. Although Jupiter Lend is not the commonly understood risk isolation model, it is also not a completely open pooled model. While it shares a common liquidity layer that allows rehypothecation, each lending pool can be configured independently with its own asset caps, liquidation thresholds, and liquidation penalties.
From the perspective of Kamino and its supporters, any allowance of rehypothecation is a complete negation of "risk isolation," and as a project, one should not use vague disclosures and false advertising to deceive users.
Higher-Level Sentiment: Some Fuel the Fire, Others Mediate
Aside from the dispute between the two parties and the community, another noteworthy point in this风波 (controversy) is the attitude of various higher-level entities within the Solana ecosystem.
First is Multicoin Capital, the venture capital fund with arguably the most influence (perhaps without the 'arguably') in the Solana ecosystem. As an investor in Kamino, Multicoin partner Tushar Jain directly posted questioning whether Jupiter was "incompetent or malicious, but neither possibility is forgivable" — objectively speaking, his remarks significantly exacerbated the controversy.
Tushar stated: "There are two possible explanations for the controversy around Jupiter Lend. One is that the Jupiter team genuinely does not understand the meaning of isolated collateral. Collateral treatment is the most important risk parameter in a lending protocol. If they don't understand this core principle of lending markets, what else haven't they figured out? Is their expertise sufficient to reassure people to deposit funds? For a lending protocol, not understanding the meaning of isolated collateral is completely unforgivable. The other possibility is that the Jupiter team is not incompetent but actively misrepresented a core part of their protocol to mislead users and attract deposits."
Clearly, Tushar's motivation was very clear: to seize this opportunity to help Kamino打击竞争对手 (strike a blow against its competitor).
Another important higher-level statement came from the Solana Foundation. As the parent ecosystem, Solana obviously does not want to see its two leading contenders become overly antagonistic, leading to overall ecosystem infighting and inefficiency.
Yesterday afternoon, Solana Foundation President Lily Liu posted on X addressing both projects and mediating: "Love you both. Overall, our lending market size is currently around $5 billion, while the Ethereum ecosystem's size is about 10 times larger. As for the traditional finance collateral market, that's countless times larger than this number. We can choose to attack each other, or we can choose to set our sights further — first work together to capture share from the entire crypto market, and then jointly advance into the vast space of traditional finance.
Simple summary — Stop fighting, or Ethereum will benefit!
Underlying Logic: The Battle for Solana's Lending Leadership
Looking at the data development of Jupiter Lend and Kamino and the market environment, this controversy, though sudden, seems like an inevitable collision that was only a matter of time.
On one hand, Kamino (red in the chart below) long held the top position as 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 within the Solana ecosystem.
On the other hand, since the major bloodbath on October 11th, market liquidity has tightened significantly, and the overall TVL of the Solana ecosystem has continued to decline; additionally, the subsequent collapse of multiple projects has made the DeFi market extremely sensitive to "security."
When the market environment was better and incremental funds were sufficient, Jupiter Lend and Kamino were relatively harmonious, as both were profitable and seemed poised to become even more so... But when the market shifted to a存量博弈 (stock game/competition for existing market share), the competitive relationship between the two became more tense and confrontational, and security issues正好又是 (happened to be) the most effective point of attack at the moment — even though Jupiter Lend has not had any security incidents historically, mere design suspicions were enough to trigger user alertness.
Perhaps from Kamino's perspective, the present was the perfect opportunity to deal a heavy blow to its opponent.
