Wildcat Says Kinto Default Doesn't Affect Other Loans
- Kinto ceases operations following exploration and default on Wildcat
- Wildcat reinforces that there is no risk of contagion
- More than US$150 million remains active on the platform
Wildcat Labs, a cryptocurrency lending protocol, announced that the Kinto network default represents the first official case of default on its platform since its launch in 2023. The announcement came after Kinto, a modular Ethereum Layer 2, confirmed that it will cease operations by the end of the month, citing a lack of resources to service debts.
"Regrettably, Kinto has announced its intention to cease operations and has stated that it does not have sufficient assets to service the full debt incurred by the Kinto Phoenix Facility market," the Wildcat team wrote in an official statement.
Regrettably, Kinto have announced their intention to shutter operations, and have stated that they have insufficient assets to repay the full debt incurred by the Kinto Phoenix Facility market.
The network had been the target of an exploit that drained $1,55 million from its lending pools. In response, it launched the "Phoenix" plan, raising $1 million and issuing a new token, $KINTO, to attempt to restore liquidity and restart operations. However, the new debt made the protocol's continuation unviable.
According to Ramón Recuero, founder of Kinto and Babylon Finance, Phoenix plan creditors will receive 76% of the principal amount of the loans, using the foundation's remaining assets. Wildcat confirmed this information, emphasizing that the withdrawal process will occur in installments, pro-rata.
“More importantly, requests in later batches will not have assets allocated until there is sufficient capital to fully honor all previous ones: think of this queue as an hourglass,”
highlighted the team.
The protocol emphasized that the case will not impact other loans. "By definition, the loss is limited to the Phoenix Line, with no risk of contagion or reduction in value to any other lender or borrower," Wildcat stated, reinforcing that Kinto will continue to seek recovery of funds from those responsible for the attack.
Currently, there is over $150 million in outstanding credit on Wildcat, and approximately $368 million has been originated since its inception. The platform's model stands out for offering undercollateralized loans, a distinct approach from traditional DeFi protocols.
Founded by Laurence Day, an influential figure at X (formerly Twitter), and Dillon Kellar of Indexed Finance, Wildcat recently raised $3,5 million in a round led by Robot Ventures, with a market valuation of around $35 million, in addition to having attracted investments from groups such as Wintermute Ventures and angel investors via Echo.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Australia Unemployment Rate set to remain at a five-year high of 4.6% in September
Blackstone's AirTrunk Postpones $1.5 Billion REIT IPO: Yield Raised to 6% but No Takers, AI Infrastructure Financing Faces 5.2% US Treasury Yield
AirTrunk, a data center operator under Blackstone, has decided to postpone the listing of its $1.5 billion Singapore Real Estate Investment Trust (REIT) to the first or second quarter of 2027. Rising U.S. Treasury yields and increased market volatility have made investors more cautious; even raising the yield from 5.5% to around 6% has not boosted demand. High capital costs are becoming a major constraint on the expansion of AI infrastructure.
CoreWeave Faces Dual Shock in Stocks and Bonds! Share Price Plummets 15%, Bonds in Trouble, Musk Exclaims "Scary"
Analysts point out that the company borrows at an interest rate of about 9%, but its investment returns are less than 5%. With total debt and lease obligations amounting to $52 billion, there is a risk that its equity value could go to zero. Rising inflation has pushed up long-term U.S. Treasury yields, leading to systemic doubts about the financing logic of capital-intensive AI companies. Prediction platforms now estimate the company's probability of bankruptcy before 2027 at 17%.
Federal Reserve Beige Book Warns of "Fierce" Oil Prices: Half of Districts Face Strong or Intensifying Price Pressures, Businesses Confront Price Increases and Profit Squeeze
The Beige Book shows that all 12 Federal Reserve districts reported the impact of rising oil prices. Businesses generally indicated that high diesel prices and fuel surcharges are passing additional costs down the entire supply chain. Since the previous Beige Book report just over a month ago, the U.S. economy has experienced moderate growth, with manufacturing serving as the main support. The labor market continues to see low hiring and low layoffs, and firms in nearly half the districts reported that AI investment is impacting employment.
Crypto prices
More
