Solana Lending Clash: Jupiter Lend Admits Rehypothecation; Kamino Blocks Access
Jupiter Lend and Kamino, two major Solana lending protocols, entered a public dispute after Jupiter Lend acknowledged it reuses (rehypothecates) collateral to generate yields. Jupiter Exchange COO Kash Dhanda corrected earlier “zero contagion” claims, saying vaults are configured with limits and liquidation parameters to remain internally isolated but confirming collateral reuse is part of the design. The revelation followed warnings from Fluid co‑founder Samyak Jain and sharp criticism from Kamino co‑founder Marius Ciubotariu, who blocked Jupiter instruments from accessing Kamino positions and warned of potential cross‑contamination across vaults. Solana Foundation President Lily Liu urged both teams to stop public attacks and focus on growing Solana’s market share; she noted Solana’s lending market is roughly $5B versus Ethereum’s ~10x larger market. On‑chain data showed continued inflows to Jupiter Lend ($36.5M on Dec 6; $26M the next day) and no large outflows at press time, while Kamino’s TVL remains larger (~$3B) though Jupiter has been gaining market share since October. Key takeaways for traders: the dispute highlights rehypothecation and counterparty risk within Solana lending, the possibility of protocol‑level access blocks, and increased short‑term volatility for Solana‑linked assets and lending tokens. Monitor on‑chain flows, lending TVL shifts, stablecoin pegs, liquidation events, and any governance or smart‑contract updates from Jupiter or Kamino that could affect liquidity and solvency.
Neutral
The news increases transparency about rehypothecation and counterparty risk in Solana lending but does not present an immediate solvency crisis. Jupiter’s admission and Kamino’s defensive actions raise short‑term counterparty and liquidity concerns that could cause volatility in SOL and lending‑token prices. However, on‑chain inflows to Jupiter and the absence of large outflows suggest users have not panicked, and Kamino’s larger TVL provides a buffer. Short term: expect higher volatility and sector‑specific risk premia as traders monitor flows, liquidations and any protocol fixes or governance actions. Long term: if Jupiter implements clearer limits, upgrades contracts, or markets stabilize, the market could absorb the rehypothecation model; persistent trust erosion or a trigger event (depeg, large liquidation) could produce broader negative effects. Overall impact is mixed — heightened risk awareness but not an outright bearish shock for SOL itself.