Solana's DeFi application, Piggybank, has embroiled in controversy over a high-risk, high-return strategy. The protocol reveals that the team previously used approximately $100,000 to purchase locked LAB through off-exchange trading, attempting to establish a neutral strategy to generate profits by shorting perpetual contracts. As LAB experienced a sharp price increase in a short period, the original hedging strategy became ineffective, forcing the protocol to close out the short positions, ultimately leaving unhedged LAB holdings.

User net worth declined by 9% to 15%.

Piggybank stated that the book value of these LAB holdings has now risen to over $1.3 million, but due to insufficient liquidity in the positions, the protocol does not include them in the net asset value. As a result, the net asset value of vault users calculated on a per-share basis has seen a significant pullback, with some deposit accounts, including stablecoin vaults, experiencing declines of 9% to 15%.

This move also sparked user dissatisfaction. The controversy centers on the team's decision to invest user funds in tokens with poor liquidity and previous allegations of market manipulation, and then use these tokens for basis trading. Community criticism primarily focuses on inadequate risk control and the strategy's discrepancy from user expectations.

TVL declined by 49.4% from its peak.

Following losses and a loss of trust, users began withdrawing their funds en masse. DefiLlama data shows that Piggybank's total locked value has decreased from $5.4 million to $2.73 million, a drop of 49.4%. This means the protocol lost nearly half of its existing funds in a short period of time.

From the timeline, Piggybank publicly addressed the LAB transaction on June 6th. Previously, on-chain investigator ZachXBT had named LAB in mid-May, alleging signs of market manipulation. Subsequently, the token surged from $1.23 to $25 within 30 days, a gain of over 1900%, triggering the liquidation of numerous short positions.

The team hinted at considering compensation tokens.

Piggybank has not yet released a formal post-mortem report. However, communications from co-founder Pierromer indicate that the team is considering airdropping compensation tokens to affected users.

Based on current indications, these compensation tokens may correspond to two sources of revenue: profits from subsequent sales of LAB tokens and a 50% share of the protocol's revenue. The specific plan has not yet been officially announced, and the team will provide further details regarding its implementation and distribution scope.