Orca and Loopscale merge into Formation, setting sights on AI, robotics and defense financing

Two names familiar to Solana DeFi users are becoming one. According to The Block, Orca and Loopscale are combining into a new entity called Formation.

The stated mission is not another trading feature. Formation is targeting financing for AI, energy, robotics and defense, sectors that usually raise money in boardrooms, not on blockchains.

What the merger brings together

Loopscale is the lending half of the pairing. It is a Solana-based protocol that went live publicly in 2025.

Its specialty is fixed-rate borrowing and lending against digital assets. That makes it a bit of an outlier in DeFi, where variable rates are the norm.

Loopscale also uses an order-book model to match borrowers and lenders.

In a typical pool-based lending market, depositors pour funds into one shared bucket. Borrowers draw from it, and an algorithm sets the rate based on how full the bucket is.

An order book works differently. Lenders post the terms they want, borrowers post what they will accept, and the protocol pairs matching offers.

In March 2025, Loopscale announced an integration that accepted Orca and Raydium LP tokens, the receipts liquidity providers get when they deposit into a trading pool.

That integration was framed as unlocking access to over $1 billion in liquidity through Loopscale’s order-book lending. Liquidity providers could borrow against those positions instead of letting them sit idle.

What this means for users and the market

For existing users of both protocols, the immediate questions are practical. How the combined entity handles current products, collateral types and governance will matter more than the new branding.

There are risks worth flagging. Financing defense and energy projects brings regulatory exposure that a pure crypto lending market does not face.

Lending to real-world companies also introduces credit risk of a different flavor. A liquidation engine can sell crypto collateral in seconds. Recovering money from a struggling hardware startup takes considerably longer.

The defense angle specifically raises another consideration. How Formation addresses that tension, including any restrictions on who can lend into those deals, will shape community reception.

Key details to watch include deal terms, leadership structure, the first financing deals Formation announces and how it vets borrowers.