Kamino, a dominant lending protocol on Solana, has sparked controversy after allegedly blacklisting a smart contract from its competitor, Jupiter Lend. The move effectively prevents users from transferring their on-chain loans to the rival platform, igniting a debate about competitive practices within the decentralized finance (DeFi) ecosystem.

The issue gained traction after developer Ankit Verma criticized the change, stating it “openly ignored open-finance principles.” He argued that Kamino was “essentially pushing users into negative APYs just to keep Kamino profitable.”

His concerns were echoed by Jupiter core contributor Kash Dhanda, who noted on X that a “major Solana DeFi team manually blacklisted Jupiter Lend and prevented users from using our Refinance tool,” without directly naming Kamino.

Escalating Competition in Solana DeFi

This conflict arises as Jupiter Lend makes significant inroads into the Solana lending market, a sector with approximately $3.7 billion in total value locked (TVL). Kamino currently controls over 60% of this market, making it the largest player.

The dispute centers on Jupiter’s recently launched Refinance tool, which allows users to seamlessly move their loan positions from other protocols to secure better rates. Shortly after the tool’s introduction, Jupiter Lend’s TVL surpassed $1 billion for the first time on December 3, fueled by consistent inflows since its launch in late August.

Samyak Jain, co-founder of the liquidity protocol Fluid which supports Jupiter Lend, reported that several Kamino users had complained about earning very low yields. When Fluid offered an alternative to improve their returns, Jain claimed Kamino “literally added a check for their users to stay locked in.”

A Question of Protocol Security

While Kamino and Jupiter have not officially commented on the situation, Kyle Samani, a managing partner at Multicoin Capital, an investor in Kamino, offered a potential rationale. He suggested two possible considerations for the blacklisting: that “Kamino users are choosing Kamino, and not Jup/Fluid,” and that Kamino’s developers may not want to “implicitly underwrite” the security of Jupiter and Fluid’s smart contracts.

The incident occurs as Kamino, the second-largest DeFi protocol on Solana by TVL, has experienced a decline in its dollar-denominated liquidity in recent months.