Author：Tomato fish pond

Jupiter Exchange's "Cat-Herder" (chief operating officer) Kash Dhanda addressed community concerns over the protocol's lending product on Saturday, acknowledging that deleted social media posts claiming Jupiter Lend vaults had "zero risk of contagion" were inaccurate.

Some prior social media posts from Jupiter advertised Jupiter Lend's vaults as having "isolated risk," and one post stated that isolated vaults "mean that pairs don't cross-contaminate, removing any risk of contagion." The post containing the latter sentence was deleted by the Jupiter team amid the controversy. 

"There was a social media post that came out in which we said that there was zero risk of contagion because of the isolated vaults. That was not a hundred percent correct," Dhanda said in a video statement. "We deleted it to avoid it kind of going any further. In hindsight we should have issued a correction right when we deleted it."

The admission comes after Fluid co-founder Samyak Jain publicly acknowledged that Jupiter Lend uses rehypothecation (reusing deposited collateral elsewhere in the protocol) for capital efficiency, meaning collateral deposited in vaults is not completely isolated from each other. Yet Jupiter Lend's vaults are "isolated in a sense that each vault has its own configs, caps, liquidation threshold, liquidation penalty, etc." Jain said. (Fluid, formerly an Ethereum-focused liquidity protocol built by the Instadapp team, powers Jupiter Lend's backend infrastructure.)

"Isolated," or not?

Marius Ciubotariu, co-founder of rival Solana lending protocol Kamino, took to X to criticize Jupiter Lend's structure, days after Kamino blocked Jupiter Lend's refinance tool from accessing Kamino positions. 

"In Jupiter Lend, if you supply SOL and borrow USDC, your SOL gets lent out to loopers, including JupSOL, INF, etc. ... You take all the risk of those loops or assets blowing up," Ciubotariu wrote. "There is no isolation here and full cross contamination, contrary to what is advertised and what people are being told."

Dhanda pushed back on characterizations that Jupiter Lend's vaults aren't truly isolated in his video, though he confirmed the protocol does employ rehypothecation. "It is true that there is rehypothecation. If there is an asset that's supplied somewhere, it can be borrowed out of debt somewhere else," he said. "This is where the yield on the collateral actually comes from."

The disagreement appears to be based on differing definitions of "isolated." In Dhanda's and Jain's view, Jupiter Lend's vaults are isolated in that each can be configured in unique ways, with their own loan-to-value ratios, liquidation penalties, and asset limits, though they share a common liquidity layer that allows for rehypothecation.

Ciubotariu's view seems to be that any rehypothecation negates claims of fully-isolated vaults. "In TradFi but also in DeFi, the fact that your collateral is rehypothecated or not, has contagion risks or not, is material information and should be very clearly disclosed," Ciubotariu wrote on X. 

"It’s very unacceptable to claim and market isolated vaults when in fact assets are being rehypothecated," said one industry insider who preferred to remain anonymous. "That’s a very serious violation of trust."

Jupiter Lend's rapid growth

Jupiter Lend launched in August with what the protocol described as "dynamic limits to isolate risk," according to The Block's previous reporting on the announcement at the Solana Accelerate conference. The protocol offered loan-to-value ratios of up to 90%, significantly higher than the typical 75% seen elsewhere in DeFi, enabled by what Dhanda then called a "bespoke liquidation engine."

Dhanda pointed to Jupiter Lend's performance during the October 10 market crash—when more than $20 billion in leveraged positions were liquidated across the crypto market—as evidence the architecture can handle stress. "Jupiter Lend went through [the crash], even though it was only a few months old at the time, with zero bad debt," he said.

The protocol has grown rapidly since launch, with total value locked just over $1 billion, per DefiLlama data, and putting it in direct competition with Kamino, which controls over 60% of Solana's lending market. The Block was unable to immediately reach Dhanda or Jupiter Lend for further comment, though Dhanda said Jupiter would release additional documentation and an explanatory video after the Solana Breakpoint conference, which begins December 11 in Abu Dhabi.

Yogita Khatri contributed reporting.