The Solana DeFi app Piggybank has come under scrutiny due to a high-risk yield strategy. The protocol disclosed that its team previously used approximately $100,000 to purchase locked-up LAB tokens via over-the-counter trades, attempting to establish a neutral position by pairing the purchase with perpetual futures short positions. As LAB’s price surged sharply in a short period, the original hedge became ineffective, forcing the protocol to close its short positions and leaving it with an unhedged LAB position.
User net value declined by 9% to 15%
Piggybank stated that the current book value of this LAB position has risen to over $1.3 million; however, due to insufficient liquidity in the position, the protocol has not included it in its net asset value. As a result, the net asset value per share for treasury users has experienced a noticeable decline, with some deposit accounts—including stablecoin treasuries—falling by 9% to 15%.
This action has also sparked user dissatisfaction. The main point of contention is that the team allocated user funds to tokens with low liquidity and a history of suspected market manipulation, using them for basis trading. Community criticism has primarily focused on inadequate risk controls and a strategy that diverges from user expectations.
TVL has declined by 49.4% from its peak.
After losses and damaged trust, users began withdrawing funds en masse. Data from DefiLlama shows that Piggybank’s total value locked has dropped from $5.4 million to $2.73 million, a 49.4% decline—meaning the protocol lost nearly half of its deposited funds in a short period.
According to the timeline, Piggybank disclosed the LAB transaction on June 6. Prior to this, on-chain investigator ZachXBT had identified LAB in mid-May, pointing to signs of market manipulation. Following this, the token surged from $1.23 to as high as $25 within 30 days—an increase of over 1,900%—triggering widespread liquidations of short positions.
The team hinted at considering token compensation.
Piggybank has not yet released an official post-mortem report. However, communications from co-founder Pierromer indicate that the team is considering distributing compensation tokens via airdrop to affected users.
Based on the current direction disclosed, these compensation tokens may entitle holders to two potential sources of revenue in the future: profits from the subsequent sale of LAB tokens, and a 50% share of the protocol’s revenue. The detailed plan has not yet been officially announced, and the specific implementation and distribution scope remain to be clarified by the team.