MarginFi Leader Resigns on Fiery Day for Major Solana Lender

On Wednesday, Edgar Pavlovsky, the CEO of MarginFi – a cryptocurrency lending and borrowing platform under development at the large Solana Decentralized Finance (DeFi) project – stepped down due to growing tensions within the company that have now become public.

Pavlovsky expressed dissent with how things have been managed both within and outside the organization in his resignation letter on X, previously known as Twitter. According to Mrgn’s statement from their account, the departure of a co-founder was due to conflicting views on operations and personal reasons.

The unexpected termination marked an explosive end to a tumultuous day for Solana’s second biggest lending platform, MarginFi. This day was filled with accusations and heightened emotions. In the midst of the turmoil, users withdrew approximately $100 million in cryptocurrency as per DeFiLlama’s data – a record-breaking day for MarginFi in terms of withdrawals.

“According to MarginFi’s tweet, all products continue to function normally and are not impacted by departures. The essence of Decentralized Finance (DeFi) lies in the fact that key contributors have the freedom to leave, while the protocol continues to thrive independently.”

After experiencing troubles with its withdrawal function for several weeks, MarginFi underwent a collapse. This issue occurred not long after the launch of their points program, which sparked a surge in growth through various incentive and loyalty programs in the Solana Decentralized Finance (DeFi) sector.

Instead of other protocols giving tokens as rewards for accumulating points, MarginFi has chosen not to do so, causing frustration among some of its user base.

Oracle issues

In mid-March, as Solana’s network congestion continued to worsen, some users encountered issues with initiating their withdrawal requests from MarginFi due to a hiccup in their pricing data sourcing system.

In a conversation with CoinDesk via Telegram, the creator of SolBlaze, a well-known liquid staking platform, expressed his viewpoint: “The Oracle’s outdated information affects withdrawals more than deposits, possibly fueling user complaints that MarginFi is holding onto their deposited funds without allowing them to cash out.”

In a message to CoinDesk via Telegram just prior to his departure, Pavlovsky expressed that the primary issue stemmed from poor implementation within our organization.

Leadership Transition

Pavlovsky’s departure leaves MarginFi’s management in a state of doubt, according to an employee involved with their New York City-focused initiative who spoke to CoinDesk and directed them to MarginFi’s announcement.

The post reassured the community that the core team members, the company, and our investors are all working diligently to facilitate a seamless handover. (No information was provided about who would be taking charge.)

Kyle Samani, the managing partner at Multicoin Capital who backs MarginFi, expressed on X his unwavering support for the protocol, with no plans to pull out any funds.

MacBrennan Peet is one potential contender who has a background of engaging in online disputes. He gained attention by publishing a video of himself without a shirt on, proclaiming “wen token,” during the last month of 2023.

Going forward, I will be true to myself in my online presence, he stated in a tweet. Peet acknowledged that his provocative social media actions and deliberately contentious persona, which he referred to as a “growth-hacking” tactic, had effectively attracted attention and expanded MarginFi’s user base.

Despite whether it involved growth hacks or not, that persona managed to make MarginFi their adversary within the Solana Decentralized Finance (DeFi) community. One formidable foe was Solend, which previously held a prominent position as the go-to protocol for borrowing and lending on Solana.

To take advantage of its rival’s vulnerabilities, Solend declared that it would distribute a token as an airdrop to users of MarginFi who transfer their funds to Solend and maintain the balance there. At present, this initiative hasn’t significantly increased deposits on Solend, based on DeFillama’s latest update.

on a day when MarginFi suffered a loss of $80 million due to withdrawals, the prominent lending-and-borrowing platform Kamino recorded its third biggest deposit inflow of $51 million.

Wen token?

Mac’s “wen token” meme video featuring him shirtless has added to the mounting pressure on the protocol, with MarginFi’s Telegram community regularly calling for the launch of a new cryptocurrency. The users are eagerly anticipating this addition to the platform.

“According to SolBlaze, individuals express a sense of disappointment as they believe they’ve contributed significantly to TVL but haven’t received the anticipated rewards, akin to an airdrop, in a points system.”

On Wednesday, MarginFi, MacBrennan, and mrgn did not share any details about the timeline or even if they would introduce a governance token for decentralized decision-making in the future. This hypothetical token would allow token holders to have a say in how MarginFi is run. If distributed as an airdrop, it could potentially bring significant rewards to the thousands of users who have been farming MarginFi since July 2023.

“The MRGN development team will carry on work towards full decentralization,” a tweet read.

Next steps

Pavlovsky’s departure won’t affect mtnDAO, a bi-annual coworking event lasting a month each time, organized by MarginFi and Cypher in Salt Lake City. According to Cypher CEO Barrett Williams, who is a friend of Pavlovsky.

In his resignation tweet posted three hours after the initial accusation against SolBlaze, Pavlovsky acknowledged that as founder of mrgn, he would ultimately bear the responsibility for any issues that arose. He also shared his intention to reflect and adapt, as he had done in the past.

Less than an hour later, he was back: “Okay, what should I build next.”