Fear of risk contagion is pervading the $SOL ecosystem as Jupiter Lend face accusations of false advertising about its risk management model.
🔹$JUP once claimed its model was Zero Contagion and risk was completely isolated. However, critics pointed out that the platform practiced rehypothecation that is, reusing user collateral to earn Yield. This directly create leverage risk and the possibility of a chain collapse like the Stream Finance depeg incident in November.
🔸Under pressure from public opinion, Jupiter representative admitted that the initial statement was not 100% accurate. Correcting that the risk of spreading is very limited but admitting that re collateralization is necessary to generate profits (Yield).
🔹Jupiter was harshly criticized for deceiving user and blocked the conversion tool to Jupiter to protect customers.
Jupiter team is incompetent or intentionally misleading to attract deposit.
🔸Despite the media crisis, the money has not fled. DeFiLlama data recorded $36.5 million and $26 million net deposits into Jupiter Lend on December 6-7. Although Kamino is still leading with a TVL of more than $3 billion, Jupiter is gradually gaining market share despite the controversy.
This incident is a wake up call for transparency in DeFi No yield is free and risk free.
In your opinion, is re collateralizing assets for high yield worth the risk of contagion?
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