Kamino’s Refinancing Block Sparks Debate About Open-Source Finance

Kamino, an open-source DeFi protocol and Solana’s leading lending market, is facing criticism for implementing a program-level block that restricts users from migrating funds to Jupiter Lend through the latter’s Refinance tool.

While some have called Kamino’s program-level block an attack on the fundamental principles of open finance, the discourse highlights Solana DeFi’s aversion to open-source culture at large.

Meanwhile, Jupiter Lend continues to grow its share in the Solana lending scene, approaching $1B in TVL amidst languishing market conditions.

Kamino Under Fire for Jupiter Lend Refinancing Block

One of the stalwarts of Solana DeFi, Kamino is facing backlash over a recent update to its open-source code, which effectively blocks users from migrating their funds using Jupiter Lend’s ‘Refinance’ feature.

Critics of the block, many of whom form the Fluid team powering Kamino’s rising competitor, Jupiter Lend, have argued that Kamino’s measure is “literally breaking the open finance rules”, positing that “Solana DeFi users deserve better”.

Other network participants have pointed the finger back at Jupiter Lend. Realms CTO Adrian highlighted that Jupiter Lend itself has yet to go open source and claimed that even with the ‘Refinance’ block, Kamino is still closer to ‘Open Finance’ than its biggest competitor.

Jupiter COO Kash Dhanda has refuted this claim, insisting that Jupiter Lend will be open-sourcing its codebase within the month.

While some CT sensationlists have taken to calling Kamino’s block a means of “locking” user funds, this is an exaggeration. Kamino depositors retain complete control over their assets, and are able to manually open and close positions on the platform without any restrictions.

How Does Solana Define ‘Open Finance’?

The definitions and standards used to describe DeFi and the onchain economy are becoming increasingly convoluted. As DeFi evolves, the lines between decentralization, permissionlessness, and what’s considered ‘onchain’ are blurring, as evidenced by prop AMMs with offchain execution dominating DEX volumes across the network.

Open source code is one of the fundamental building blocks of DeFi, yet vast swathes of the Solana ecosystem are happy to overlook this fact in the name of defending their moat. While open-source transparency is table stakes on other networks, Solana has yet to embrace this cornerstone of crypto culture. 

One could argue that in this case, Kamino is falling victim to the throes of good faith. Had Kamino’s contracts been kept private, like many other Solana DeFi applications, it’s unlikely that Fluid developers would’ve been able to weaponize this ‘block’ against them. 

As it stands, transparency was the winner on the day, highlighting issues in protocol operation to help DeFi users make more informed choices. 

Jupiter Lend Continues to Grow Market Share

Competition between Solana’s top lending markets is reaching a fever pitch. While Kamino has dominated the sector, owing largely to its commitment to an open source codebase and high investor-trust, Jupiter Lend has steadily been gaining ground on the leader.

Since launching in late August, Jupiter Lend has consistently grown its $SOL-denominated TVL. In the same time frame, Kamino Lend’s TVL has remained comparatively flat, suggesting Jupiter Lend is enjoying a stronger growth trajectory than the market leader.

USD-denominated TVL paints a more distinct picture. While Jupiter Lend’s dollar-value TVL has steadily climbed since its debut, Kamino’s USD-denominated TVL has dropped by 20.72%. On one hand, this could suggest that DeFi users are migrating capital away from Kamino to rival venues.

On the other, Kamino’s TVL decline could be due to the depreciation of assets held on the platform, like $SOL. According to DefiLlama data, over 50% of Jupiter Lend’s TVL is comprised of $JLP and stablecoins, while Kamino’s TVL, outside $PYUSD, is mostly made up of $SOL and LSTs.

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