Civil War Erupts in the Solana Ecosystem: Jupiter and Kamino Fall Out, Foundation Urges Reconciliation

Original Title: “Two Lending Giants on Solana Go Head-to-Head, Foundation Steps In to Mediate”

Original Author: Azuma

Original Source:

Repost: Mars Finance

Over the past weekend, the two leading lending protocols on Solana, Jupiter Lend and Kamino, clashed publicly.

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

How It Started: Jupiter’s Quietly Deleted Tweet

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

However, Jupiter Lend’s final design did not align with the industry’s common understanding of a risk isolation model. In general, a DeFi lending pool with risk isolation is designed to segment risks associated with different assets or markets, preventing a single asset default or market crash from impacting the entire protocol. Key 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, debt, and risk parameters.

· Collateral Isolation: Users can only use assets within the same pool as collateral to borrow other assets; risk transmission across pools is blocked.

In reality, Jupiter Lend’s design allows for rehypothecation (reusing deposited collateral elsewhere in the protocol) to improve capital efficiency, meaning that collateral deposited in the vaults is not completely isolated from one another. Jupiter co-founder Samyak Jain explained that Jupiter Lend’s pools are “isolated in a sense, as each pool has its own configuration, caps, liquidation thresholds, penalties, etc.,” and that the rehypothecation mechanism is merely to optimize capital utilization.

While Jupiter’s product documentation for Jupiter Lend provided a more detailed explanation than their initial promotions, it is fair to say that the early marketing around “risk isolation” did deviate from widely held market perceptions, and could be considered misleading.

The Battle Erupts: Kamino Launches an Attack

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

Marius stated: “Jupiter Lend repeatedly claims there is no cross-contamination between assets, which is absolutely nonsense. In reality, in Jupiter Lend, if you deposit SOL and borrow USDC, your SOL is lent out to other users who are loop-borrowing with JupSOL or INF, exposing you to the risks of those loops blowing up or asset failures. There is no isolation here—there is complete cross-contamination, which is contrary to advertisements and what people have been told. In both TradFi and DeFi, whether collateral is rehypothecated and whether contagion risks exist are crucial pieces of information that must be clearly disclosed, and no one should be allowed to obscure or misrepresent this.”

After Kamino’s move, discussions around Jupiter Lend’s product design quickly exploded in the community. Some agreed that Jupiter engaged in false advertising—for example, Penis Ventures CEO 8bitpenis.sol angrily accused Jupiter of outright lying and deceiving users from the start. Others argued that Jupiter Lend’s design balances security and efficiency, and that Kamino’s attack was just market competition with ulterior motives—for example, overseas KOL letsgetonchain commented: “Jupiter Lend’s design achieves the capital efficiency of a pooled model, while maintaining some risk management capabilities of modular lending protocols… Kamino can’t stop people from migrating to better technology.”

Under mounting pressure, Jupiter quietly deleted its early posts, but this only fueled even greater FUD. Later, Jupiter COO Kash Dhanda admitted that the team’s previous claim of “zero contagion risk” on social media was inaccurate, and apologized, saying they should have issued a correction statement along with the deletions.

The Core Dispute: Defining “Risk Isolation”

Judging by community sentiment, the fundamental disagreement lies in differing definitions of “risk isolation” among various groups.

From the perspective of Jupiter and its supporters, “risk isolation” is not a completely static concept—there is room for design flexibility. Jupiter Lend isn’t a pure risk isolation model as traditionally understood, but it’s also not a fully open pooled model. While a shared liquidity layer allows for rehypothecation, each lending pool can be independently configured with its own asset caps, liquidation thresholds, and penalties.

From Kamino and its supporters’ view, any allowance for rehypothecation is a complete rejection of “risk isolation,” and project teams should not mislead users through vague disclosures or false advertising.

Higher-Level Perspectives: Adding Fuel or Mediating

Beyond the direct parties and the community, another point of interest in this saga is the attitude of higher-level stakeholders within the Solana ecosystem.

First is Multicoin, the most influential VC in the Solana ecosystem (seemingly without question). As an investor in Kamino, Multicoin partner Tushar Jain publicly questioned Jupiter, saying they were “either incompetent or malicious, and either way, it’s inexcusable”—objectively, his comments significantly intensified the controversy.

Tushar said: “There are two possible explanations for the Jupiter Lend controversy. One is that the Jupiter team genuinely does not understand the meaning of isolated collateral. How collateral is handled is the most important risk parameter in a lending protocol. If they don’t grasp this core principle of lending markets, what else don’t they understand? Can their professionalism be trusted with user funds? Failing to understand isolated collateral is completely inexcusable for a lending protocol. The other possibility is that the Jupiter team is not incompetent, but is deliberately misrepresenting their protocol’s core aspects to mislead users and attract deposits.”

Clearly, Tushar’s motivation is to seize this opportunity to help Kamino hit its competitor as hard as possible.

Another key intervention came from the Solana Foundation. As the parent ecosystem, Solana clearly does not want to see its two leading projects fall into destructive conflict, risking the overall ecosystem’s health.

Yesterday afternoon, Solana Foundation President Lily Liu posted on X, calling for peace between the two projects: “Love you both. Overall, our lending market is about $5 billion in size, while Ethereum’s is roughly 10x that. As for the collateral markets in traditional finance, those numbers are many, many times larger. We can choose to attack each other, or we can set our sights further—work together to capture more of the crypto market, and ultimately take on the vast world of traditional finance.

In short—stop fighting, or Ethereum will benefit at our expense!

Underlying Logic: The Battle for Solana Lending Dominance

Looking at the data trends for Jupiter Lend and Kamino, and the broader market environment, this conflict, while sudden, was arguably inevitable.

On one hand, Kamino (red line in the chart below) had long dominated the Solana lending landscape, but since Jupiter Lend (blue line) launched, it has captured significant market share, becoming the only real challenger to Kamino in the Solana ecosystem.

On the other hand, since the massive crash on October 11, market liquidity has tightened, and Solana’s overall TVL has continued to decline; multiple project failures have also made DeFi users extremely sensitive to “security.”

When market conditions were good and fresh capital was flowing in, Jupiter Lend and Kamino coexisted peacefully—there was enough profit for everyone, and it looked like the pie would only grow. But as the market shifted to a zero-sum game, competition intensified, and security became the most effective point of attack—even if Jupiter Lend had no historical security incidents, the mere suspicion in its design was enough to trigger user caution.

From Kamino’s perspective, now may be the perfect moment to deal its competitor a heavy blow.