— Debate About Jupiter Architecture 🤯$JUP Lend Explodes in the Solana Community
The controversy involving Jupiter Lend — the lending protocol of the Jupiter exchange, built on Solana — gained a new chapter over the weekend. Kash Dhanda, COO of Jupiter and known internally as “Cat-Herder,” publicly admitted that the team made a mistake in claiming that the protocol's vaults offered “zero contagion risk.”
The misleading statement reignited criticism from competing platforms, sparked debates over re-hypothecation, and raised questions about transparency in the risk design of Jupiter Lend's vaults.
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⚠️ “Was not 100% correct”: COO of Jupiter acknowledges failure in communications
In a video posted on X, Kash Dhanda acknowledged that the official posts claiming total risk isolation were inaccurate.
“There was a post where we said there was zero contagion risk because of the isolated vaults. That was not 100% correct. We took down the post to prevent it from spreading. In retrospect, we should have issued a correction immediately,” said Dhanda.
Despite this, he defended the system:
“The vaults are truly isolated — each has its own parameters, limits, and settings.”
Dhanda also confirmed that Jupiter Lend engages in re-hypothecation, meaning the reuse of collateral at other points in the protocol.
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🔄 Re-hypothecation ignites controversy — Kamino and Fluid respond
The admission came shortly after Samyak Jain, co-founder of Fluid — the platform that provides the back-end infrastructure for Jupiter Lend — also acknowledged that the protocol uses re-hypothecation:
“Yes, Jupiter Lend re-hypothecates collateral for capital efficiency. This means that an asset in a vault can be moved elsewhere in the system.”
🟥 Kamino reacts
Kamino, the main rival in lending within Solana, had blocked migration tools from Jupiter Lend last week due to concerns over what was considered “misleading” communication.
The co-founder of Kamino, Marius Ciubotariu, openly criticized:
“If you provide SOL and borrow USDC on Jupiter Lend, your SOL can be lent to loopers like JupSOL, INF, etc. You assume the full risk of these loops exploding. This is not isolation.”
Ciubotariu argues that any re-hypothecation invalidates the claim of isolated vaults.
An industry expert, who preferred to remain anonymous, reinforced:
“It is unacceptable to market isolated vaults when assets are being re-hypothecated. This is a breach of trust.”
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🔍 “Isolated” depends on the definition?
The dispute revolves around the definition of “isolation”.
📌 For Jupiter / Fluid:
• Each vault has its own parameters, limits, and rules.
• Isolation refers to individual design, not necessarily to absolute segregation of liquidity.
📌 For Kamino / critics:
• If collateral can be reused at other points in the protocol, there is no real isolation.
• Re-hypothecation = contagion possibility → thus, the communication was misleading.
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📈 Explosive growth of Jupiter Lend contrasts with controversy
Despite the criticism, Jupiter Lend has grown rapidly since its launch in August:
• TVL exceeds $1 billion, according to DefiLlama.
• Competes directly with Kamino, which dominates over 60% of Solana's lending market.
• Offers LTVs of up to 90%, thanks to the “custom liquidation engine”—well above industry standards.
Dhanda used the crash of October 10 to defend the robustness of the system:
“Jupiter Lend went through the crash — with billions liquidated in the market — with zero uncollectible debts.”
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🧭 What comes next?
The controversy is not going to disappear anytime soon.
❗ Points that must remain at the center of the debate:
• Transparency about re-hypothecation
• Definitions and communications about “risk isolation”
• Rivalry between Jupiter Lend and Kamino
• Structural security of Solana's lending protocols
With the aggressive growth of Jupiter Lend and the open criticism from competitors, Solana enters a new phase of the debate on systemic risks, contagion, and liquidity design in high-speed protocols.
