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Howdy!

Trump’s (partial) tariff reversal was a win for the “nothing ever happens” crowd, of which I count myself a proud member. It’s our time to gloat, y’all.

Today, we’ve got a new borrow-lend, SOL open interest, and confidential balances:

Loopscale launches for more efficient Solana DeFi

More than a half decade into DeFi, the sector is still somewhat of a wild west beset by elevated risk, unpredictable yields and the occasional crisis. Mary Gooneratne, co-founder of Solana DeFi upstart Loopscale, wants to give blockchain borrow-lend a facelift.

“A lot of those [existing DeFi] architectures were designed kind of as a function of Ethereum’s constraints,” Gooneratne said in an interview. 

Lightspeed has learned exclusively that Loopscale is opening its protocol to the public today, marking the end of its closed beta phase.

Loopscale’s distinguishing feature is its order book architecture that executes loans by directly matching lenders and borrowers with fixed rates and terms. This is in contrast to the pool-based model, which allows users to lend into and borrow against different baskets of reserve assets. The Ethereum borrow-lend giant Aave uses pools, for example.

Pool-based lending leaves markets “constrained by the riskiest asset in that basket,” Gooneratne told me. Loopscale’s order book lets borrowers and lenders take a market view on assets rather than adopting the protocol’s pre-set risk profile, she added.

Gooneratne and her co-founder Luke Truitt met while working on a computer science project for an undergraduate class at Duke. They went on to found a defense startup while still in school, which was acquired in 2020. 

After graduating, Gooneratne and Truitt began working on a real-world asset lending startup, Gooneratne said. As part of that work, the pair set up a lending market for whiskey — tokenized by the Solana-based liquor collection startup Baxus in which collectors or distillers could borrow against their spirits.

Building on Solana should allow Loopscale to open new forms of decentralized financing, Gooneratne said. She gave the example of DePIN: Since DePIN payment streams are publicly visible, and their ownership can theoretically be transferred to lenders and priced, node operators could use their payment streams as collateral on loans to acquire more nodes. 

But since this is cryptoworld, the most popular initial use cases may be the more speculative ones. Loopscale offers a loop product where users can take on leveraged loans by borrowing against a yield-bearing asset to acquire more of the asset. Loopscale also has a points system set up, presumably for users to stake their claim to a future token.

— Jack Kubinec

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I’m unsure what SOL’s price will do next, but I’m sure it will be dramatic:

Solana open interest — or the amount of derivatives volume that has not yet been settled — is back at levels we haven’t seen since late February, according to CoinGlass data.

Chaos is a ladder, as they say, and traders are taking bets on how the Trump tariff craziness will shake out. On Deribit, the two most popular SOL derivatives right now are puts at $110 and calls at $120. SOL is currently trading at $111.

— Jack Kubinec

Solana recently activated a token extension trio that brings encrypted balances, discreet supply and private fee handling to the network. They're calling the combo "Confidential Balances." 

Most blockchains expose token balances and transaction details by default. That's great for transparency, but not for sensitive use cases like payroll or B2B payments.

Confidential Balances let devs encrypt these details while still proving they're valid. The system uses zero-knowledge proofs to confirm the math checks out without revealing actual amounts. On top of that, ElGamal encryption guarantees only authorized parties can view private data.

Takeaway: Web3 mostly traded privacy for decentralized transparency. This is Solana's attempt to bring back some of that old-school confidentiality, letting users keep their balances hidden. However, without Web2's intermediaries, will it make fraud more challenging to spot?

— Jeffrey Albus

A message from Mary Gooneratne, co-founder of Loopscale: