The two leading lending platforms on Solana have fallen out, and the Foundation has stepped in to mediate.

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

Author: Azuma

Source: Odaily Planet Daily

Over the past weekend, the two leading lending protocols on Solana, Jupiter Lend and Kamino, got into a public spat.

Note: According to Defillama data, Jupiter and Kamino currently have the highest TVL among protocols in the Solana ecosystem.

Origin of the Incident: Jupiter’s Deleted Tweet

The incident traces back to August this year, when Jupiter was promoting its lending product, Jupiter Lend, before its launch. At that time, Jupiter repeatedly emphasized that the product featured “risk isolation” (related posts have been deleted), meaning that risk would not spread between different lending pools.

However, the final implementation of Jupiter Lend did not match the common market understanding of a risk isolation model. In general, a DeFi lending pool with risk isolation refers to a design that segments risks between different assets or markets, preventing a default or collapse in one asset or market from affecting the entire protocol. The main features of this structure include:

Pool Isolation: Different asset types (such as stablecoins, volatile assets, NFT collateral, etc.) are assigned to independent lending pools, each with its own liquidity, debts, 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. In reality, Jupiter Lend’s design supports rehypothecation (reusing deposited collateral elsewhere within the protocol) to improve capital efficiency, meaning that deposited collateral is not completely isolated. Jupiter co-founder Samyak Jain explained that the lending pools are “in a sense” isolated, as each has its own configuration, caps, liquidation thresholds, penalties, etc. The rehypothecation mechanism is only to optimize capital utilization.

Although Jupiter’s product documentation offers a more detailed explanation than its promotional content, objectively speaking, the early “risk isolation” claims did differ from common market perceptions and could be considered misleading.

Escalation: Kamino Launches Attack

On December 6, Kamino co-founder Marius Ciubotariu seized the opportunity to criticize Jupiter Lend and blocked Kamino’s migration tool to Jupiter Lend.

Marius stated: “Jupiter Lend repeatedly claims there is no cross-contamination between assets, which is completely false. In reality, if you deposit SOL and borrow USDC in Jupiter Lend, your SOL is lent to other users engaging in loop lending with JupSOL and INF, exposing you to all the risks of those positions blowing up. There are no isolation measures—there is complete cross-contamination, contrary to their advertising and what users have been told… In TradFi and DeFi, whether collateral can be rehypothecated and whether there are contagion risks are critical pieces of information that must be clearly disclosed, and no one should be vague or misleading about this.”

After Kamino’s move, the debate over Jupiter Lend’s design quickly exploded in the community. Some agreed that Jupiter was guilty of false advertising—Penis Ventures CEO 8bitpenis.sol, for example, accused Jupiter of outright lying and deceiving users from the start. Others believed Jupiter Lend’s design balanced safety and efficiency, and that Kamino’s attack was simply market competition with impure motives—overseas KOL letsgetonchain commented: “Jupiter Lend’s design achieves the capital efficiency of pooled lending while maintaining some modular lending protocol risk management. Kamino can’t stop people from moving to better tech.”

Under mounting pressure, Jupiter quietly deleted its early posts, which only fueled even more FUD. Later, Jupiter COO Kash Dhanda admitted the earlier “zero contagion risk” statements on social media were inaccurate and apologized, saying they should have issued a correction when deleting the posts.

Core Dispute: The Definition of “Risk Isolation”

Summing up the current polarized attitudes in the community, the core disagreement seems to be differing definitions of “risk isolation.”

In Jupiter and its supporters’ view, “risk isolation” is not a completely static concept and allows for some design flexibility. Jupiter Lend, while not the traditional risk isolation model, is not a fully open pooled model either. Despite sharing a general liquidity layer that allows rehypothecation, each lending pool can be configured independently with its own asset caps, liquidation thresholds, and penalties.

Kamino and its supporters, on the other hand, view any allowance for rehypothecation as a complete denial of “risk isolation,” and believe that project teams should not use vague disclosures or false advertising to mislead users.

Higher-Level Perspectives: Some Fuel the Fire, Others Mediate

Beyond the direct dispute and community debate, another noteworthy aspect is the stance of the higher-ups within the Solana ecosystem.

First is Multicoin, the most influential VC in the Solana ecosystem (seemingly without exception). As an investor in Kamino, Multicoin partner Tushar Jain directly questioned Jupiter, saying “they are either incompetent or malicious, but either way, it’s inexcusable”—objectively, his remarks greatly intensified the situation.

Tushar stated: “There are two possible explanations for the controversy around Jupiter Lend. One is that the Jupiter team truly does not understand what isolated collateral means. The way collateral is handled is the most important risk parameter in a lending protocol. If they don’t understand this core principle of lending markets, what else don’t they understand? Can we trust their competence with our funds? For a lending protocol, not understanding isolated collateral is completely inexcusable. The other possibility is that the Jupiter team is not incompetent, but is intentionally misrepresenting the core part of their protocol to mislead users and attract deposits.”

Clearly, Tushar’s motive is obvious: seize the opportunity to help Kamino strike at its competitor.

Another important statement came from the Solana Foundation. As the parent ecosystem, Solana obviously does not want to see its two leading projects at odds, resulting in internal strife.

Yesterday afternoon, Solana Foundation President Lily Liu posted on X, calling for peace: “Love you both. Overall, our lending market size is about $5 billion, while Ethereum’s is about 10 times larger. The collateral market in TradFi is orders of magnitude bigger. We can choose to attack each other, or we can look further ahead—first work together to capture a larger share of the crypto market, then go after the vast opportunities in traditional finance.”

In short—stop fighting, or Ethereum will take advantage!

Underlying Logic: The Battle for Solana Lending Dominance

Considering Jupiter Lend and Kamino’s data and the market environment, this flare-up, while sudden, seems like an inevitable clash that was only a matter of time.

On one hand, Kamino (red line below) had long held the top lending spot in the Solana ecosystem, but since Jupiter Lend (blue line below) launched, it has rapidly captured significant market share and is now the only real challenger to Kamino within Solana.

On the other hand, after the major crash on October 11, market liquidity tightened significantly, Solana’s overall TVL kept declining, and a string of project failures made DeFi users extremely sensitive to “security.”

When the market was good and capital was flowing, Jupiter Lend and Kamino were relatively harmonious—both were making money and the pie seemed to be growing. But as the market shifted to a zero-sum game, competition became much fiercer, and security emerged as the most effective angle of attack—even though Jupiter Lend has never had a security incident, mere design concerns are enough to make users wary.

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