Chaos at MarginFi Shakes up Solana DeFi’s Borrow-and-Lend Landscape

On Wednesdays, MarginFi experienced leadership turmoil leading to a mass withdrawal of approximately $200 million in cryptocurrency funds from their borrow-and-lend platform. Instead of waiting it out, these digital coins have been redirected towards rival platforms operating on the Solana blockchain.

It seems that Solend has emerged as the top gainer in the last 24 hours, with approximately $17 million worth of deposits added to its platform. This is the largest daily deposit influx for Solend since July 2022. As a result, Solend’s deposits grew by almost 12% within just one day, and its token experienced a notable surge of around 37%.

After 0xRooter, Solend’s anonymous head, announced a free distribution of tokens to lenders who transferred their funds from MarginFi to his borrowing-and-lending site (one of the earliest in Solana Decentralized Finance), these price surges occurred.

In just one day, DeFi Llama reported an impressive increase of $81 million, equating to a 8.5% surge, for Kamino’s new deposits. Although it doesn’t currently have its own token, there are plans to distribute one to users later this month. Prior to the recent turmoil, Kamino had surpassed MarginFi as the leading borrow-and-lend platform on Solana.

Drift experienced a gain of approximately $3.38 million in deposit amounts. They manage a comprehensive platform that includes options for lending and borrowing, profit-yielding plans, and a continuous futures trading exchange.

Despite a significant withdrawal of deposits amounting to 31%, MarginFi remains the second largest borrowing and lending platform on Solana, and the fifth biggest Decentralized Finance (DeFi) protocol in terms of Total Value Locked (TVL). However, the unexpected resignation of its long-standing CEO, Edgar Pavlovsky, has cast doubt over MarginFi’s short-term leadership and future direction. Regardless, its on-chain programs continue to function as intended.

Edgar Pavlovsky, who has led MarginFi for a long time, stepped down on Wednesday due to a disagreement within mrgn, the protocol’s development team. After his departure, the mRGN team seemed to have resolved an issue with the protocol’s price data system that had been causing withdrawal problems for over a month.