Loopscale's Revolutionary Approach to DeFi Lending on Solana

The evolution of decentralized lending has reached an inflection point. While pool-based protocols like Aave and Camino have dominated the market for years, a new wave of innovation is emerging that fundamentally reimagines how borrowers and lenders interact on-chain. At the forefront of this shift sits Loopscale, a Solana-native lending protocol that's building an order book-based system designed to unlock capital efficiency and support an explosion of new collateral types.

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In a wide-ranging conversation on Lightspeed, Loopscale co-founder Mary Gooneratne sat down with host Jack Cubanak to discuss the protocol's unique architecture, its recovery from an early exploit, and the broader future of DeFi lending. What emerged was a compelling vision of credit markets that could serve everyone from sophisticated Orca market makers to whiskey traders setting up their first Phantom wallets.

The Three Eras of DeFi Lending

DeFi lending has evolved through distinct phases, each addressing limitations of what came before. According to Gooneratne, researchers at Blockworks have identified three stages: monolithic pool-based, modular pool-based, and finally, modular order book-based systems like Loopscale. Understanding this progression is essential for grasping why order book lending represents such a significant departure from existing models.

The first generation of lending protocols—exemplified by Aave's original architecture—created multi-asset pools where interest rates were determined purely by utilization. This design was optimal for bootstrapping liquidity in an era when nobody knew if there was sufficient borrowing demand to sustain a lending market. The simplicity worked: deposit assets, earn yield, borrow against collateral. But this monolithic approach created fundamental inefficiencies that became more apparent as markets matured.

"What the difference architecturally comes down to on a user level is that you have these multi-asset pools and interest rates are priced as a function of utilization," Gooneratne explained. "Which creates two issues. One, interest rate is priced on nothing besides utilization, which means that if I'm borrowing against USCC against Bonk, I'm paying the same rate as someone borrowing USCC against USCT."

This pricing mismatch forces safer borrowers to subsidize riskier ones. The market inherently prices based on the entire collateral basket, creating premiums for those posting high-quality collateral. Beyond rate inefficiencies, the pool model forces idle liquidity and prevents protocols from effectively serving diverse collateral types. Want to add a riskier asset? Your only option is spinning up isolated pools, fragmenting liquidity across the ecosystem.

The Morpho Revolution and Its Limitations

The second generation addressed some of these concerns through modular, curated vaults. Protocols like Morpho introduced isolated markets that gave depositors more control over their risk exposure. Instead of dumping all assets into a single pool, curators could create specialized vaults targeting specific risk-return profiles. This represented meaningful progress in capital allocation efficiency.

Morpho introduced innovations like public allocators that allow vaults to lend to other vaults, optimizing capital flow across different isolated markets. These improvements demonstrated that there was appetite for more sophisticated credit products in DeFi. But even these modular systems retained the fundamental pool-based primitive underneath, inheriting many of the same structural limitations.

The challenge remained: how do you achieve both the liquidity benefits of pools and the configurability of isolated markets? This tension between depth and customization has constrained DeFi lending since its inception, pushing innovators to search for new architectural foundations.

Order Book Lending: Loopscale's Core Innovation

Loopscale represents the third evolution in DeFi lending by replacing pools entirely with a multi-parameter order book. Rather than depositing into a shared pool, lenders place limit orders specifying the terms under which they're willing to extend credit. Borrowers then fill these orders with market orders, creating direct bilateral credit relationships.

"The base primitive of a bilateral credit transaction means you have one borrower, one lender," Gooneratne explained. "You can have collateral, you don't need collateral. You have a custom interest rate, custom LTV, liquidation mechanism, payment schedule. And then that provides the foundation to be able to do the DeFi credit we have right now, but you also have that scalable foundation that lets you build what we believe are the next five to ten years of DeFi credit products on-chain."

This isn't entirely unprecedented—Aave actually started as ETH LEND, a peer-to-peer lending protocol with individual borrow requests. But early iterations suffered from severe liquidity fragmentation, with capital scattered across countless individual order possibilities. Loopscale's key insight was recognizing that the order book could be a front-end concept rather than a limitation.

As a lender on Loopscale, you place orders where a single bucket of capital matches to multiple different rule sets. Any borrower meeting those parameters can fill the order without fragmenting your liquidity across every possible loan configuration. Meanwhile, borrowers place market orders and receive immediate execution, preserving the UX benefits of pool-based systems while gaining the customization of bilateral agreements.

Why Solana Enables Order Book Lending

The Loopscale team has been building on Solana since 2021, and Gooneratne was emphatic about why the chain remains their only focus. The origin story involves practical economics: as college students, they were priced out of deploying contracts on Ethereum when gas fees exceeded $1,000 for basic testing. But the commitment to Solana goes far deeper than cost savings.

"Once you start using it, you don't run into issues again," Gooneratne said. "When we were building on ETH, we constantly were running into issues of things we couldn't do or were cost prohibitive. We have things that we can optimize now, but the chain has never been a constraint. The day the chain becomes a constraint, maybe we'll look elsewhere, but that hasn't happened."

Beyond raw performance, Solana's architecture enables the scalable order book abstraction that makes Loopscale possible. Running an off-chain matching engine for on-chain orders requires high throughput and low latency—exactly what Solana provides. The chain's embrace of financial optimization, including emerging work on transaction ordering and market microstructure, signals a commitment to DeFi that Gooneratne finds encouraging.

"I think Solana has embraced DeFi and recognizes that one of the best value propositions for blockchain is the financial aspect," she noted. "Optimizing market structure and blockchain around market structure is important. To see that consideration at the top level is pretty sick."

While transaction ordering matters more for some applications than lending today, Gooneratne acknowledged that as Loopscale builds toward high-speed credit secondary markets, concepts like app-specific sequencing could become relevant. For now, though, the existing infrastructure has proven more than sufficient for their needs.

The April Exploit: Recovery and Resilience

Two weeks after Loopscale's public launch in April—which saw TVL skyrocket to $50 million—the protocol suffered an exploit that drained $5.8 million. For any protocol, this would be devastating. For one just emerging from six months of closed beta, it could have been fatal.

The exploit wasn't an oracle manipulation in the traditional sense, though it involved the pricing oracle integration. A malicious actor was able to pass a spoofed program that misrepresented the price of a specific collateral asset. By feeding the protocol a contract claiming an asset was worth far more than its actual value, the attacker took out a series of severely under-collateralized loans.

"They basically fed in a contract that said this asset is worth X amount of money," Gooneratne explained. "That made it look like 0.01 of this asset was worth $10 million and borrowed against that."

The technical failure was a validation gap—the protocol didn't properly verify the program being passed for a specific asset. Within two days of the exploit, the team contacted the attacker and recovered all funds before reopening after additional audits on withdrawal processes.

What struck Gooneratne was the community response. Rather than abandoning the protocol, users rallied behind the team. "It felt like the community was rooting for us in a way that I was not expecting," she said. "People were just as excited. I got DMs saying, 'I'm adding to my Loopscale position.'"

The experience fundamentally changed how the team approaches development. "There's no protocol that's more secure than a protocol that's been through something like that," Gooneratne reflected. "It shows you everything you thought you knew was wrong and really teaches you the trade-off you're making if you ever prioritize shipping speed over security."

Rebuilding Trust Through Ecosystem Partnerships

The growth strategy following the exploit shifted from pursuing large institutional LPs to building ecosystem partnerships. Rather than chasing whale capital that might prove mercenary, Loopscale focused on integrations with protocols like Sanctum and Orca that have natural collateral assets—LSTs and LP positions—seeking credit market support.

These partnerships create mutually beneficial arrangements. For protocols like Sanctum, spinning up credit funds for their assets represents one of the few ways to spend treasury capital that isn't purely mercenary incentive farming. By depositing into Loopscale vaults and bootstrapping credit markets for their tokens, they earn yield while driving TVL and ecosystem growth for both parties.

"That's been kind of a major strategy for growth over the past few months," Gooneratne said. "And then looking forward, another thing we're really excited about is improving that credit product building experience. Right now the vault management experience is primarily focused on us as a curator. Making it easier for people and funds to spin up effectively their own credit products and bring on external curators is the next phase."

This focus on enabling others to build on Loopscale's infrastructure rather than owning every user interaction reflects a sophisticated understanding of sustainable growth. The protocol becomes more valuable as an embedded liquidity and risk management layer than as a consumer-facing application competing for attention.

The Competitive Landscape: Borrowers Are Everything

With Camino commanding $5 billion in deposits on Solana and Aave larger than all of Solana DeFi combined, Loopscale faces formidable competition. But Gooneratne frames the challenge in terms that make it seem surprisingly tractable.

"The name of the game is originations and being able to get borrowers," she explained. "You have a distribution chart for borrows where maybe 50 to 100 borrowers on these super big protocols are driving 80 to 90% of the borrow volume."

This concentration means Loopscale doesn't need to win millions of users—it needs to win hundreds of sophisticated borrowers who generate disproportionate volume. The protocol's differentiation on collateral types, rates, and fixed-rate offerings positions it to compete effectively for this audience. Getting 100 larger borrowers seems far more achievable than reaching $2 billion in borrowed demand framed abstractly.

The initial user base was Orca market makers leveraging LP positions—a sophisticated cohort that discovered Loopscale during its closed beta in August 2024. These users demonstrated that demand exists for borrowing against novel collateral types that pool-based protocols can't efficiently serve.

Unlocking Net New Use Cases

Perhaps the most exciting aspect of order book lending is what it enables beyond existing DeFi primitives. Loopscale's origins in RWA lending with Baxis—a protocol for tokenized whiskey—demonstrated that the architecture could serve entirely non-crypto use cases.

"We were doing fixed term, fixed payment schedule loans against our casks and bottles, primarily casks, working with whiskey traders and whiskey funds," Gooneratne recounted. "A lot of times to enable them to finance building out a distillery or they want to buy a new cask because that's their business."

The whiskey financing customers were "setting up Phantom wallets for the first time" and asking "what is USDC?" This represents genuine expansion of blockchain utility to populations that couldn't care less about cryptocurrency speculation. The fact that Loopscale's infrastructure can serve these users alongside Orca market makers speaks to its architectural flexibility.

Looking forward, Gooneratne envisions even more innovative applications. Consider Shopify merchants receiving USDC payments that flow into programmatically controlled accounts. A token representing that account could serve as collateral for a loan. If the borrower defaults, payment streams automatically reroute to repay the lender. This is effectively small business lending against revenue streams—something that exists in traditional finance but with much higher costs and friction.

"The main reason small businesses can't get credit in the real world is it's viewed as too risky," Gooneratne explained. "One of the biggest levers for risk is the fact that either there's no collateral, they have no visibility into the assets, or it's expensive to go and get that collateral. All the ways you can make that servicing and risk management process cheaper, you're able to reduce the price of credit and give credit to more people."

DePIN Financing: Digital Native Opportunities

Beyond traditional business financing, Loopscale has explored DePIN financing—lending against decentralized physical infrastructure network assets. The team spoke with Helium node operators who wanted to expand their hotspot deployments but lacked the capital to purchase additional hardware.

"We talked to a lot of different Helium node operators and it was so cool," Gooneratne said. "People that don't really know or care that much about crypto, they're getting their girlfriend's parents to put up a Helium node and charging them a fee. They've got their own businesses running."

These operators want to buy more hotspots but don't have the cash flow yet. Being able to borrow against the NFT representing their node or their incoming payment streams could finance hardware purchases that expand network coverage. The Helium treasury itself might fund such lending—a thousand new hotspots plus 6% yield represents compelling value for the network even if individual lenders wouldn't accept that return.

This illustrates how DeFi credit can serve as bootstrap capital for ecosystem growth. Rather than pure yield farming, protocols can deploy treasury funds into productive lending that accelerates adoption of their core infrastructure while generating returns.

Building for Both Whales and Whiskey Traders

The divergent sophistication levels of Loopscale's target users—crypto-native Orca LPs and whiskey merchants discovering wallets for the first time—creates significant UX challenges. The protocol has evolved substantially from its RWA-focused origins, when it featured MPC wallets with fingerprint signing and email login rather than wallet connection.

The current approach segments experiences. A prime experience exists for whitelisted users who access the protocol through partners like Baxis—same underlying protocol, different front-end optimized for higher-touch onboarding. For crypto-native users, the strategy is progressive disclosure: enter through the simplest possible interface, with sophisticated features revealed as users explore.

"When you enter our app for the first time, you're handed the easiest possible experience," Gooneratne explained. "When you're lending, you're going to lend to vaults. When you're borrowing, it's just an easy modal. The goal is that sophisticated users click around enough to find those views—order book views and different things—as they continue to play around."

Don't scare anyone initially; reveal complexity over time. It's a design philosophy that acknowledges both the power user demand for configurability and the reality that most users want simplicity.

The Innovation Landscape in DeFi Lending

Asked to cut through the noise and identify genuine innovation in DeFi lending, Gooneratne pointed to the evolutionary stages as meaningful milestones. Aave's pool model was right for its time, given Ethereum constraints and the need to prove borrowing demand existed. Morpho's modular vaults represented the next step—capital allocation efficiency and risk control.

Order books represent the third innovation wave, achieving both perfect configuration and liquidity depth through architectural choices that previous attempts at peer-to-peer lending missed. The key difference from early ETH LEND iterations is the abstraction layer: lenders don't fragment capital across individual orders, and borrowers get immediate execution through market orders.

But the innovation work isn't finished. Composability remains the next frontier—making it easy for external applications to tap into Loopscale's liquidity and risk management infrastructure. A recently introduced feature called "loan lock" enables flash borrow functionality where borrowers can take collateral, execute arbitrary operations, and return at healthy collateralization levels by transaction end.

"That's an extremely powerful primitive for being able to trade with margin," Gooneratne noted. "Your end game is originations—you need to provide capital that users need at the right context."

The Embedded Finance Opportunity

Traditional fintech learned that embedding financial products at the point of need drives adoption. Affirm's buy-now-pay-later appears at checkout when users are ready to spend. Paraffin lends to DoorDash merchants when they need working capital. Credit works best when offered in context rather than requiring users to seek it out.

DeFi has largely missed this insight. Most users don't think about why they'd borrow until presented with a specific use case. Loopscale's infrastructure play aims to enable any application to embed borrowing functionality—margin for trading, financing for purchases, leverage for yield strategies—powered by the underlying order book.

This requires both technical composability and business model alignment. Loopscale needs to provide enough value in the integration that it retains meaningful position in the value chain. The risk of becoming pure infrastructure that gets forked away haunts every protocol that enables others to build on top.

Strategic Integration Decisions

The tension between integration and competition has played out dramatically in Solana DeFi. Raydium's pump.fun integration initially seemed symbiotic; now pump.fun has its own AMM and many question whether Raydium wasted resources enabling a future competitor.

Gooneratne approaches integrations cautiously. "There are for sure times where if you're small enough, integrations probably serve to hurt you and waste your time rather than just building the valuable product," she said. The key question: is this ultimately complementary and helping us grow, or are we going to rug ourselves five years down the line?

For lending specifically, the calculus differs from pure infrastructure plays. Risk management isn't pure code that can be trivially forked. If Loopscale curates vaults and owns the liquidity relationships, that expertise and trust represents defensible value. The protocol can serve as backend infrastructure for applications offering margin trading or embedded credit without losing its competitive position.

"There is no world in which I'd be happy where the borrowers are on one side and lenders on another side and we only own their user," Gooneratne emphasized. "Making sure you're not exclusively infrastructure and someone else is the majority of your users on either side is probably a good guideline."

Growing the Pie vs. Chasing Whales

A recurring challenge in DeFi is the mercenary nature of capital. Whales move from protocol to protocol chasing yields, rarely providing sticky liquidity. When the same hundred borrowers drive most volume across lending platforms, competing for their business becomes a zero-sum game.

Loopscale's answer is expanding total addressable market rather than fighting over existing capital. New collateral types—LSTs, LP positions, RWAs, DePIN tokens—bring new borrowers who couldn't participate in traditional lending markets. The whiskey traders and Helium operators represent net new credit demand, not reshuffled DeFi capital.

This expansion can extend cross-chain, though Gooneratne expressed minimal interest in multichain deployment. "There's no reason to be zero-sum within Solana just because of the size," she acknowledged, but added: "Every time someone asks 'are you considering building on this?'—no, that's the last thing I'm thinking about."

The conviction to stay focused while others chase multichain expansion reflects lessons learned from the protocol's extended closed beta. Six months of product development before public launch, building for borrower needs rather than TVL metrics, created the architectural flexibility to serve diverse use cases now.

Resisting Short-Term Temptations

Crypto's eternal temptation toward short-term games—token launches juicing metrics, incentive farming driving temporary TVL—threatens sustainable protocol building. Liquidity attracted by mercenary incentives proves universally non-sticky.

"Someone should delete all of Twitter," Gooneratne joked, but the sentiment was serious. CT's influence on decision-making often optimizes for attention rather than value creation. The pressure to launch tokens, announce partnerships, and drive numbers creates noise that drowns out patient product development.

Loopscale's six-month closed beta represented a deliberate rejection of this dynamic. Users during that period weren't the type to rally on Twitter—they were Orca market makers with specific borrowing needs. The focus remained on building genuinely better borrower experiences rather than marketing metrics.

"That really paid off in learning," Gooneratne reflected. "Now we've built a product so flexible that when someone wants to issue some sort of credit product, it's almost always 'yeah, we can do that—we just need to expose it on the front end.' That was a function of really sitting tight, taking it slow with product and design."

Founder Lessons: Think for Yourself

Asked what she wishes she'd known before launch, Gooneratne emphasized the importance of independent thinking over Twitter consensus. Your team—hand-selected co-founders and colleagues—should influence decisions far more than the social media roller coaster.

"Things that seem like everything has changed from day to day—literally nothing has tangibly changed," she said. "There's actually infrastructure backing this thing and people don't recognize that. A lot of critical thinking gets missed in groupthink that you could avoid by slowing down and not paying attention to that stuff."

The benefit of an in-office team compounds this advantage. When your bubble is colleagues rather than crypto Twitter, you maintain the headspace to build rather than react. User feedback matters; the constant drama of CT mostly doesn't.

The Road Ahead

Loopscale's immediate focus continues on composability and credit product building tools. Making it easier for external parties to spin up their own vaults, integrate Loopscale liquidity into their applications, and serve their user bases with embedded credit represents the next growth phase.

The institutional LP conversations that paused after the exploit are resuming as trust rebuilds. The ecosystem partnership strategy has proven sustainable and mutually beneficial. And the underlying architecture continues demonstrating its ability to serve use cases from sophisticated DeFi leverage to real-world asset financing.

"We genuinely believe there is a world in which DeFi has a significant mark on traditional finance," Gooneratne concluded. "We want to be a part of that and hope that there is a longer term business out of all of this."

For a protocol that suffered an exploit two weeks after launch, that optimism might seem premature. But when you've spent six months in closed beta building for borrowers rather than metrics, recovered user funds within 48 hours of an attack, and emerged with community support stronger than before—perhaps long-term thinking isn't just ideology. It's strategy.

The Solana DeFi Opportunity

The numbers tell a stark story: Aave alone is larger than all of Solana DeFi combined. This gap represents both challenge and opportunity. If Solana continues attracting users and liquidity at current rates, the lending market will expand dramatically. Loopscale's architectural innovations position it to capture disproportionate share of that growth.

More importantly, the diversity of Solana's asset landscape plays directly to Loopscale's strengths. Seventy percent of SOL sits in native stake, creating massive LST markets that pool-based lending struggles to efficiently serve. LP positions across Orca, Raydium, and other DEXs represent billions in collateral that users want to borrow against. The explosion of new asset types—from memecoins to RWAs to DePIN tokens—requires lending infrastructure flexible enough to support them.

Pool-based protocols that price interest rates purely on utilization will continue forcing inefficient trade-offs. Order book lending removes these constraints, enabling each collateral type to be priced according to its actual risk profile. The lender willing to accept Bonk collateral pays for that risk; the lender accepting USDC collateral doesn't subsidize them.

Conclusion: Infrastructure for the Next Decade

DeFi lending's first decade established the basic primitives: deposit, borrow, liquidate. Pools bootstrapped liquidity and proved demand existed. Modular vaults introduced risk segmentation. But the architecture remained fundamentally the same—pools pricing on utilization, forcing trade-offs between liquidity depth and collateral diversity.

Loopscale's order book model represents a genuine architectural shift. By matching borrowers and lenders bilaterally through configurable orders, the protocol achieves both the customization of isolated markets and the liquidity of shared pools. This foundation supports not just existing DeFi use cases but entirely new credit products: fixed-rate loans, revenue-backed financing, DePIN leverage, RWA collateralization.

The hack taught hard lessons about security and shipping speed. The recovery demonstrated community resilience and team competence. What emerges is a protocol better positioned for long-term success than many that never faced such challenges.

For Solana's DeFi ecosystem, Loopscale represents exactly the kind of innovation the chain enables: a complex matching engine that would be prohibitively expensive on Ethereum, serving diverse users from sophisticated traders to whiskey merchants, building infrastructure for credit markets that don't yet exist.

The next five to ten years of DeFi lending won't look like the last. Order books, fixed rates, programmatic collateral, embedded credit—these aren't incremental improvements but fundamental expansions of what's possible. Loopscale is betting its future on being the infrastructure layer that makes them happen.

Facts + Figures

• Loopscale's architecture uses a multi-parameter order book rather than traditional pool-based lending, enabling direct borrower-lender matching with customizable terms including interest rates, LTVs, liquidation mechanisms, and payment schedules.

• TVL reached $50 million within weeks of Loopscale's April 2025 public launch before the exploit occurred.

• $5.8 million was stolen in an oracle-related exploit two weeks after launch, with all funds recovered within two days after the team contacted the attacker.

• Aave is larger than all of Solana DeFi combined, highlighting the massive growth opportunity for lending protocols on Solana.

• Camino has approximately $5 billion in deposits on Solana, making it one of the dominant lending protocols in the ecosystem.

• 50 to 100 borrowers drive 80-90% of borrow volume on major lending protocols, according to Gooneratne, suggesting concentrated opportunity in serving sophisticated users.

• 70% of SOL sits in native stake, creating a massive market for borrowing against LST positions that pool-based protocols struggle to efficiently serve.

• Six months of closed beta preceded Loopscale's public launch, focusing on product development with Orca market makers as initial users.

• The team has been building on Solana since 2021, originally switching from Ethereum due to prohibitive deployment costs exceeding $1,000 for testing.

• Baxis partnership enables tokenized whiskey financing with fixed-term, fixed-payment-schedule loans against casks and bottles for whiskey traders and funds.

• Loan lock feature enables flash borrow functionality where users can take collateral, execute operations, and return at healthy collateralization levels by transaction end.

• Ecosystem partnerships with Sanctum and Orca have become a major growth strategy, with these protocols spinning up credit funds for their collateral assets.

• Prime experience exists for whitelisted users accessing through partners, featuring a different front-end optimized for higher-touch onboarding.

• DePIN financing conversations included discussions with Helium node operators seeking capital to expand their hotspot deployments.

• Revenue stream financing is envisioned for Shopify merchants using USDC payments as programmable collateral.

Questions Answered

What makes Loopscale different from other DeFi lending protocols?

Loopscale replaces traditional pool-based lending with an order book model where lenders place limit orders specifying their terms and borrowers fill them with market orders. This creates direct bilateral credit relationships rather than depositing into shared pools. The architecture enables custom interest rates, LTVs, liquidation mechanisms, and payment schedules for each loan. Unlike pool-based protocols where interest rates depend solely on utilization—forcing borrowers against safe collateral to subsidize those using risky assets—Loopscale allows proper risk pricing per collateral type. The system achieves both the liquidity benefits of pools and the customization of isolated markets through abstraction layers that prevent capital fragmentation.

Why does Loopscale build exclusively on Solana?

The Loopscale team has built on Solana since 2021 after being priced out of Ethereum development—gas costs exceeded $1,000 for basic testing when they were college students. Beyond cost, Solana's architecture enables the scalable order book abstraction that Loopscale requires. Running an off-chain matching engine for on-chain orders demands high throughput and low latency. Co-founder Mary Gooneratne emphasized that the chain has never been a constraint: "The day the chain becomes a constraint, maybe we'll look elsewhere, but that hasn't happened." She also praised Solana's embrace of financial optimization at the protocol level, noting the chain's willingness to optimize for DeFi rather than positioning as a general-purpose platform.

What happened during the Loopscale exploit and how did they recover?

Two weeks after public launch, Loopscale suffered an exploit where a malicious actor passed a spoofed program that misrepresented the price of a specific collateral asset. By feeding the protocol a contract claiming an asset was worth far more than its actual value, the attacker took out under-collateralized loans totaling $5.8 million. The technical failure was a validation gap for programs passed in for specific assets. Within two days, the team contacted the attacker and recovered all funds before reopening after additional audits on withdrawal processes. Gooneratne described the experience as transformative: "There's no protocol that's more secure than a protocol that's been through something like that."

How does Loopscale compete with much larger lending protocols?

Rather than competing for millions of users, Loopscale focuses on winning the relatively small number of sophisticated borrowers who drive disproportionate volume—Gooneratne estimates 50-100 borrowers generate 80-90% of borrows on major platforms. The protocol differentiates through support for diverse collateral types that pool-based lending cannot efficiently serve, including LSTs, LP positions, and RWAs. Ecosystem partnerships with protocols like Sanctum and Orca help bootstrap credit markets for their assets. The strategy emphasizes growing the total addressable market through new use cases rather than fighting for existing DeFi capital.

What new use cases does order book lending enable?

Order book lending enables net new credit products impossible in traditional DeFi. Real-world asset financing through partners like Baxis serves whiskey traders borrowing against tokenized casks. DePIN financing could let Helium node operators borrow against payment streams to purchase additional hotspots. Revenue stream financing is envisioned for e-commerce merchants using programmable USDC payments as collateral with automatic repayment routing upon default. These use cases work because order books can price each collateral type according to actual risk while supporting custom terms like fixed rates and payment schedules that pool-based protocols cannot offer.

How does Loopscale approach user experience across different user types?

Loopscale serves users ranging from sophisticated Orca market makers to whiskey merchants setting up their first Phantom wallets. The protocol addresses this through segmented experiences: a "prime experience" exists for whitelisted users accessing through partners like Baxis, featuring a different front-end optimized for higher-touch onboarding. For crypto-native users, the approach is progressive disclosure—enter through the simplest possible interface with sophisticated features revealed as users explore. "Don't scare anyone at first and reveal the sophistication over time" summarizes the design philosophy.

What is Loopscale's approach to integrations and partnerships?

Loopscale approaches integrations cautiously, recognizing they can be actively harmful if a protocol is too small or positions itself as pure forkable infrastructure. The guiding principle is ensuring the protocol isn't exclusively on one side of a transaction where another party owns the valuable relationships. Risk management expertise and liquidity curation represent defensible value that can't be easily forked. The protocol aims to serve as backend infrastructure for embedded credit products while maintaining meaningful position in the value chain—not becoming pure infrastructure that gets forked away like Raydium's pump.fun experience.

What are Loopscale's plans for the future?

Immediate priorities focus on composability and credit product building tools. The "loan lock" feature enabling flash borrow functionality represents progress toward making Loopscale infrastructure easily accessible to external applications. The team is working to make it easier for external parties to spin up their own vaults, integrate Loopscale liquidity, and serve their user bases with embedded credit. Institutional LP conversations that paused after the exploit are resuming as trust rebuilds. Long-term, Loopscale believes DeFi credit markets could be 10x larger than current chapter, driven by new collateral types and use cases that order book architecture uniquely enables.