Cryptocurrencies

Community and Lending Protocols Clash Over $250M Outflow at Solana Lender MarginFi

Solana network-based Defi protocols MarginFi, Solend, & SolBlaze found themselves embroiled in a dispute with each other. Solana is a well-known Proof-of-Stake (PoS) crypto network recognized for its highly scalable transactions with minimal fees. In recent weeks, the Solana network has been making headlines due to congestion issues, reportedly caused by increased bot activity impacting performance.

On April 11, 2024, Solana network’s lending protocol SolBlaze accused MarginFi of not restocking BLZE tokens in their rewards system for the past three days. Furthermore, they claimed that attempts to communicate with MarginFi about the issue were ignored.

MacBrennan, co-founder of the MRGN group, responded to the allegations, citing network congestion as the primary reason for miscommunication:

We were the target of a very unfortunate hit piece today. I’ll clarify the misinformation you’re seeing: 1) This tweet is completely wrong MarginFi has failed to replenish BLZE over the last 3 days, not three weeks. Yes, this is because of chain congestion and prioritizing… pic.twitter.com/c8OhZqBYza

Following the controversy, users criticized MarginFi for lack of transparency in their backend operations. One user stated, “I like MarginFi I like Blaze. As someone who has Blaze in MarginFi I can with 100% confidence say the rewards stopped weeks ago not days.”

In response, Solend, another protocol on the Solana network, urged MarginFi users to withdraw their funds and deposit them into Solend to receive an airdrop reward:

Solend will airdrop to users who withdraw from MarginFi and deposit into Solend.

Rooter, Solend’s founder, shared his perspective on the dispute, revealing that his project had been attacked by the MarginFi team during a market downturn. He emphasized the importance of healthy competition while condemning misbehavior.

Amid the ongoing drama, Edgar Pavlovsky, CEO and founder of MarginFi, announced his resignation from all roles within the project and backend company. He expressed dissatisfaction with internal and external issues and indirectly pointed fingers at the backend firm.

In the midst of these events, more users are flocking to the Solend Protocol, with user numbers increasing significantly in a day. Simultaneously, the total value locked (TVL) in the MarginFi protocol has decreased from $910 million to $660 million.

Read also: Experts compare Ethena’s USDe with the collapsed crypto project TerraUSD



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