Analysis of the Kamino Controversy: Questions Regarding the Blocking and Liquidation of Migration Tools and Data.
TL;DR
In early December 2025, Kamino Finance blocked Jupiter Lend's one-click migration tool, triggering intense conflict within the Solana lending ecosystem. Key points of contention included: (1) Kamino accused Jupiter Lend of misleadingly claiming "zero contagion risk" and "isolated vaults," while actually presenting a risk of re-collateralization across assets; (2) the community questioned Kamino's alleged falsification of liquidation data to attract deposits, but lacked on-chain evidence to support this claim; and (3) the blockage trapped users' assets in a low-yield environment, drawing strong criticism. During the event, Kamino's TVL fell 12.7% to $2.19 billion, while Jupiter Lend's TVL bucked the trend, rising 7.8% to $1.03 billion. The Solana Foundation called for unity between the two sides, but the dispute remained unresolved as of December 8th.
Core Event Analysis
Timeline (December 1-8, 2025 UTC)
| date | Key events | Influence |
|---|---|---|
| November 30th - December 1st | 220 million KMNO tokens unlocked (approximately $11 million, representing 22% of the market capitalization) | Increased selling pressure caused TVL to fall from HK$2.51 billion to HK$2.15 billion (-14.5%). |
| December 2 | The community discovered that Kamino blacklisted Jupiter Lend addresses, preventing one-click migration. | Users criticize it for violating the open spirit of DeFi (x.com) |
| December 3 | News media reports on the blocking incident indicate that users are trapped in a low-return environment. | sparked widespread discussion defiant |
| December 6 | Jupiter COO Kash Dhanda admitted that the "zero risk of infection" statement was inaccurate; Kamino co-founder Marius reiterated that Jupiter misled users. | The two sides openly confronted each other. |
| December 7 | DMH accuses Kamino of falsifying liquidation data; Solana Foundation Chair Lily Liu calls for an end to internal strife. | The dispute escalated without a substantial resolution. (x.com) |
| December 8 | The lockdown continues, and no recovery migration tool announcement has been issued. | The deadlock continues |
Reasons for blocking migration tools
Kamino's official stance : Co-founder Marius Ciubotariu stated on December 6th that the tool was blocked because users were misled by Jupiter's "significantly misleading information" regarding the protocol's design and risks. Kamino believes that Jupiter's vault exposes suppliers to the risk of revolving lenders through rehypothecation (e.g., SOL collateral being lent out for other assets), and is not truly segregated. Service will not be restored unless Jupiter ceases its misleading claims and provides two-way migration tools.
Jupiter responded : COO Kash Dhanda admitted in a video on December 6th that he had deleted the "zero risk of contagion" post, stating that the statement was "not 100% accurate." Jupiter explained that its vaults are segregated at the configuration level (independent LTV, capped), but re-collateralize to optimize returns, and no bad debts were incurred during the market volatility in October. Dhanda expressed regret for not immediately correcting the statement .
The core of the technical dispute lies in the definition of "vault segregation"—Jupiter/Fluid defines it as an independent parameter configuration for each vault; critics (Kamino, founder of Fluid) point out that re-mortgaging practices make it possible to be fully exposed to contagion risks across assets.
Details of the fake liquidation scandal
The allegations : On December 2nd and 7th, account DMH accused Kamino of a "falsified liquidation data scandal" and "falsified liquidation parameters," claiming it was part of a series of problems including "fake APRs" and preventing users from exiting. The allegations were framed as either incompetence (misunderstanding the liquidation mechanism) or deliberate misrepresentation of core risk parameters to attract deposits. x.com
Evidence verification :
- On-chain data : No liquidation events were detected between December 1st and 8th, and no Liquidate-related records were found in the protocol logs.
- Source credibility : The accusation comes from only a single source (DMH tweet, 30,000-73,000 views), without corroboration from mainstream media or on-chain data, thus its credibility is low.
- Kamino's history : Previously, it emphasized low liquidation penalties (0.1%, reduced by 90% by September 2025) and an efficient liquidation engine, but no formal response has been seen regarding the allegations made in December.
Conclusion : The allegations of fraudulent liquidation lack substantial evidence and reflect more of the community's dissatisfaction with the Kamino lockdown than evidence of verified data fabrication.
User impact
Direct impact :
- Kamino users are unable to migrate their loans to Jupiter Lend using the one-click tool and must manually withdraw and re-deposit, resulting in liquidity being trapped in a low-yield or even negative APY environment.
- Community complaints allege that this move traps users in suboptimal positions, limiting their opportunities to access better risk-adjusted returns from other protocols.
Market impact :
- Despite the controversy, Jupiter Lend continues to receive an average daily inflow of $36-62 million.
- Unreported financial losses or bad debt events
- Kamino continues its Season 5 incentive program to maintain competitiveness.
On-chain data analysis
TVL changing trend
Kamino's performance : From December 1st to 7th, TVL decreased from $2.51 billion to $2.19 billion, a drop of 12.7%, with a single-day plunge of 14.5% to $2.15 billion on December 2nd, coinciding with the token unlocking and blocking events.
Jupiter Lend's performance : TVL grew from $960 million to $1.03 billion during the same period, an increase of 7.8%, indicating that it continued to attract capital inflows during the controversy.
Solana Lending Market : Estimated total lending TVL decreased from approximately $3.6 billion on December 1st to approximately $3.3 billion on December 7th (a drop of 8.3%). Kamino's market share remained at 70-75%, while Jupiter Lend accounted for approximately 25-28%. The overall TVL of the Solana chain fluctuated between $8.2-9.3 billion, with no chain-level crash of $3.7 billion observed.
Activity level indicators
| protocol | Total trading volume from December 1st to 7th | Average number of daily transfers | Peak Date |
|---|---|---|---|
| Kamino | $7.5 billion | 9,756 entries | December 1-2 ($2.3 billion) |
| Jupiter Lend | $1.3 billion | 4,862 entries | December 4th/7th ($220 million) |
Key findings :
- Kamino saw high trading volume ($2.3 billion) on December 1-2, coinciding with a decline in TVL, suggesting net outflows or migration.
- No cross-protocol multisignature transactions were detected, indicating that the block effectively prevented programmatic migration.
- No evidence of asset circulation (borrowing-supply is the same as asset circulation) was found; over 99% were one-way transfers.
- Jupiter's overall agreement fees average $650,000 to $2,900,000 per day, with revenue ranging from $120,000 to $720,000 per day.
Community sentiment analysis
KOL Opinions
Criticism of the Kamino camp :
- Laura Shin : Expressed shock at the blacklist policy, believing it sets a harmful precedent for DeFi users' choice . (x.com)
- DeFi Made Here (DMH) : Questioning the integrity of Kamino's liquidation data, oscillating between incompetence and deliberate deception . x.com
- @letsgetonchain : Pointed out that Kamino's declining market position and user restrictions are a passive reaction to Jupiter's appeal . x.com
Neutral/Technical Analysis :
- Kash Dhanda (Jupiter COO) : Acknowledged a miscommunication, emphasized limiting contagion risk through vault allocation, and cited the defiant's record of no bad debts during the October volatility period.
- Marius Ciubotariu (Kamino co-founder) : He insists that the lockdown is a necessary measure due to user misunderstandings of Jupiter's design, emphasizing the risks of cross-asset interconnection.
Ecological mediation :
- Lily Liu (President of the Solana Foundation) : She urged Kamino and Jupiter to focus their efforts on gaining market share from both crypto and traditional financial markets, rather than engaging in internal competition. She pointed to the $5 billion gap in Solana's lending market compared to Ethereum's $50 billion. (x.com)
Emotional polarity
Bearish on Kamino (approximately 70% of the discussion):
- Defensive blocking is seen as anti-competitive and user-hostile.
- Potential fraudulent liquidation data undermines trust.
- Violating the principles of openness and transparency in DeFi
Neutral/bullish view (approximately 30%):
- Acknowledging healthy competition but criticizing the methods
- Kamino's innovations (such as the RWA integration) are commendable.
- Recognizing the importance of risk disclosure
Core narrative : The community generally believes that the lockdown strategy backfired, reinforcing the negative perception that Kamino was losing its market dominance, while Jupiter's rapid growth and foundation support further solidified the bearish sentiment.
in conclusion
The Kamino-Jupiter dispute exposes multiple contradictions within the increasingly competitive Solana DeFi ecosystem: disagreements over technical terminology (interpretation of "vault segregation"), the balance between user protection and protocol competition, and disputes over transparency standards. On-chain data shows that Kamino's TVL fell by 12.7% during the lockdown, while Jupiter Lend bucked the trend, growing by 7.8%, indicating market sentiment favoring open migration. The accusation of fake liquidation lacks substantial evidence and reflects more of an emotional outburst from the community regarding the lockdown. As of December 8th, the dispute shows no signs of resolution, and the Solana Foundation's mediation appeal has not yielded any tangible results. In the long term, this incident may prompt the Solana ecosystem to establish clearer risk disclosure standards and interoperability specifications, but in the short term, Kamino faces the dual challenges of user trust and market share.