'Liquidity begets liquidity': Solana DEX aggregator Jupiter unveils a new lending protocol

Jupiter, the leading decentralized exchange aggregator on Solana, unveiled a new lending protocol on stage at the Solana Accelerate conference on Thursday. The new feature will be powered through a partnership with Fluid, which started out as an Ethereum liquidity layer.

"Fluid is a proven leader in DeFi," Kash Dhanda said Thursday. "Now they’re bringing their innovation to Solana."

Jupiter, launched in 2021 by pseudonymous dev Meow, is a cornerstone protocol of the Solana ecosystem that handles approximately 95% of Solana's DEX aggregator volume. Its move into lending represents a major step into a new, but related, vertical. In January, the project distributed 700 million JUP tokens — worth about $580 million — to users, stakers, and contributors based on trading activity after airdropping nearly 1 billion JUP tokens in 2023.

JUP, the protocol's native token, is up over 12% on Thursday to $0.58, according to The Block's data page.

"You can go from swaps and perpetuals [trading] to borrowing and lending," Dhanda said. "Liquidity begets liquidity."

According to Dhanda, Jupiter Lend will be the "most advanced money market at a technical level." The protocol will offer loan-to-value ratios — used to assess risk in lending — of 90%, compared to around 75% elsewhere in crypto. It will achieve these metrics by using a bespoke liquidation engine and "dynamic limits to isolate risk."

A liquidation engine is a smart contract mechanism that automatically sells a borrower's collateral to repay a loan when their LTV ratio exceeds a predefined threshold, protecting the wider protocol from defaults.

Users can "go further while paying less," Dhanda said, noting he expects Jupiter Lend fees to be as low as 0.1%. In other words, users will be able to take more out on credit by using less collateral.

Jupiter Lend, which has not yet launched but has an open waitlist, will start with two protocols built in-house. The “lending protocol” will unlock “one-click” deposits while the “vault protocol” will enable users to borrow “at good rates.” The team expects to expand functionality and introduce new features, and invites other teams to build on its fully composable platform, Dhanda said.

"Just use Jupiter," Dhanda said, ending his presentation, echoing the common slogan used by the largest onchain lending protocol, Aave.