Key Takeaways:
Solana-based decentralized finance (DeFi) lending platform MarginFi has seen nearly $200 million in crypto withdrawn over the last two days following the abrupt resignation of its CEO, Edgar Pavlovsky.
CEO of Solana-Based Lending Protocol MarginFi Quits Amid Internal Disputes and External Accusations
On April 10th, the now-former chief of MarginFi announced he is stepping down from his role, including the research division, amid a backdrop of internal disputes and external accusations from competing platforms.
In the hours leading up to the event, Pavlovsky engaged in a heated debate with MarginFi users on X, concerning the delayed launch of the protocol’s long-anticipated MRGN governance token.
In a now-deleted X post, he wrote, “After today, feels maximally right to push back on any kind of token. Will see what I can do internally to brick this”. This statement caused a fiery response from the MarginFi community.
In the wake of the controversy that was worsened by public insults from the former CEO, the total outflows from the decentralized lending platform reached as high as $191 million over the last 48 hours, as noted by Dune Analytics.
SolBlaze and Solend Accuse MarginFi of Not Delivering Promised Rewards
The situation did not get any better after multiple Solana-based protocols accused MarginFi of not meeting their requirements.
SolBlaze, a Solana-based staking pool, claimed that MarginFI had allegedly failed in its obligation to replenish BLZE token emissions for users. This meant that BLZE lenders on the platform were not paid yields on their deposits within the specific time frame.
However, the platform’s co-founder MacBrennan Peet argued that the delay was caused by a series of factors like chain congestion on the Solana network and user safety concerns. He asserted that MarginFi had failed to replenish BLZE tokens only over the last three days.
Peet described SolBlaze’s accusations as “completely wrong”, claiming that MarginFi has consistently paid out more than the required amount to BLZE lenders and borrowers.
Meanwhile, the founder of rival Solana lending and borrowing platform, Solend, accused MarginFi of undermining the platform’s reputation by spreading false information about its total value locked and attacking its oracles.
Despite the upheaval, the high-profile exit of its CEO, and the internal discord that was catapulted into public view, MarginFi has reassured its customers that all its services remain stable and the team remains committed to the platform’s growth.
Solend has seized the opportunity to attract disenchanted MarginFi users by offering airdrops to those who transfer their funds to the platform, proportional to the migrated value.
Following Pavlovsky’s departure, the MarginFi team expressed willingness to mend things with SolBlaze and reaffirmed its commitment to supporting the partnership. The platform also hinted at a potential path toward reconciliation and stability after a tumultuous few weeks.
Solana Suffers Network Congestion Due to “Unprecedented Demand”
The infighting is happening against a backdrop of critically bad network congestion on the Solana blockchain, causing transactions to fail and making it difficult to perform even the most basic on-chain tasks.
X user “@redacted_noah”, a Solana maximalist and the head of protocol engineering at Helium Foundation, voiced his frustration on the social media platform by stating that “Solana sucks to use right now”.
After weeks of steaming frustrations by developers and X threads of DeFi platforms accusing each other of the blockchain’s failure, the real cause was identified. Last week, Austin Federa, the head of strategy at the Solana Foundation explained that the issue stemmed from the implementation of the QUIC protocol and can be attributed to a known problem that got much worse due to “unprecedented demand” for tokens and products deployed on the blockchain.
He promised that the congestion issue is on Solana’s roadmap to be fixed. However, Federa also noted that the foundation is currently putting more attention and resources towards upcoming updates like the Firedancer client, which aims to make Solana more robust following multiple instances of crashes and downtime.
At the time of writing, Solana (SOL) is trading at $173 – down 0.7% in the last 24 hours.
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