Solana's Orca merges with Loopscale to form Formation

Solana-based decentralized exchange Orca and lending platform Loopscale have merged to form Formation, a new entity led by CEO Luke Truitt. Moving beyond traditional crypto trading, Formation aims to finance capital-intensive, real-world sectors like AI, energy, robotics, and defense. While the merger leverages Orca's $550 billion historical trading volume and Loopscale's order-book lending infrastructure, transitioning to real-world asset financing introduces significant credit risks and regulatory exposure.

Details of the merger

• ▪Solana-based decentralized exchange Orca and lending platform Loopscale merged under the new name Formation, as announced to The Block
• ▪Loopscale co-founder Luke Truitt will serve as the CEO of Formation, the entity formed by merging Orca and Loopscale, while Orca's Christopher Montagano will serve as the chief strategy and legal officer

Formation's business plans

• ▪Formation is working with Figure, Shinhan Asset Management, Superstate, R3, and Securitize to bring assets to market and assist in their distribution
• ▪Formation plans to roll out tools for asset issuers and new investment strategies over the next year, aiming to cut costs and eventually offer access to regulated U.S. capital markets
• ▪Formation aims to finance capital-intensive sectors including artificial intelligence, energy, robotics, and defense by combining Orca's trading infrastructure with Loopscale's lending and investment vaults

Risks of real-world asset financing

• ▪Financing defense and energy projects introduces regulatory exposure that pure cryptocurrency lending markets do not typically face
• ▪Lending to real-world companies introduces credit risks where recovering funds from a struggling hardware startup takes considerably longer than liquidating cryptocurrency collateral

Background of Orca

• ▪In August 2026, Orca partnered with Shinhan Asset Management, the Solana Foundation, and Etherfuse in a proof-of-concept project for a tokenized Korean won bond fund
• ▪Orca has processed over $550 billion in trading volume since 2021 and raised $18 million in 2021 in a funding round co-led by Polychain Capital, Placeholder, and Three Arrows Capital

Background of Loopscale

• ▪In March 2025, Loopscale integrated Orca and Raydium liquidity provider tokens, allowing users to borrow against those positions to access liquidity
• ▪Loopscale, one of the protocols merging to form Formation, went live publicly in 2025
• ▪Loopscale operates as a Solana-based protocol utilizing an order-book model where lenders and borrowers post terms to be paired, rather than using a shared pool-based lending market
• ▪Loopscale, formerly known as Bridgesplit, has facilitated over $2 billion in loans, reports over $150 million in deposits, and raised $4.25 million in 2021 from investors including Solana Labs and Coinbase Ventures

Debatable claims

• ▪The illiquid credit risks of real-world startups outweigh the benefits for DeFi lending platforms
• ▪Formation's expansion into regulated sectors poses an unacceptable regulatory threat to its decentralized network
• ▪DeFi protocols are appropriate funding mechanisms for defense and military projects