Orca is merging with lending protocol Loopscale and expanding beyond decentralized exchange services into lending, investing and on-chain financing. The Block reported early on Oct. 8 Beijing time that the combined team will operate under the new name Formation, with AI, robotics, energy and defense identified as areas where it wants to serve financing demand.
By the time the news became public, ORCA had already moved sharply higher. Based on CoinGecko daily close data cited in the source, the token traded at $1.65 on Sept. 30 and reached $3.21 on Oct. 6, a rise of about 94.5%. The daily closes for Oct. 4, Oct. 5 and Oct. 6 were $2.01, $2.42 and $3.21, respectively. At the time of publication on Oct. 8, ORCA was quoted at about $3.07, down roughly 3.5% over 24 hours but still up about 73.4% over seven days.
Expansion signals appeared before the merger announcement
The price move did not start with the merger headline alone. On Sept. 29, a new proposal appeared on Orca’s governance forum. The team said it had already agreed terms to acquire a Solana DeFi protocol, a deal meant to add lending and yield products. On Oct. 5, that proposal moved into an on-chain vote.
A week later, the target was named: Loopscale. According to the announcement, Loopscale offers lending and investment vaults, reports more than $150 million in deposits, and has facilitated more than $2 billion in cumulative loans. Orca continues to handle trading and liquidity. The combined business wants to connect financing for new assets with markets where those assets can trade.
The two sides also said in their release that both protocols will remain foundational to the ORCA and xORCA token network. Formation plans to launch issuance tools and investment strategies over the next 12 months and explore regulated capital markets in the United States. For Orca, adding lending products also opens another revenue line beyond spot trading turnover.
That timeline matters. The market had access to signs of expansion before the formal merger announcement, so attributing the entire rally to the Oct. 8 news would leave out the acquisition plan and the revenue-allocation debate that were already public.
Buybacks are real, but the revenue split may change
Part of Orca’s appeal has been straightforward: it generates protocol revenue and it buys back its own token. The xORCA structure is central to that thesis.
As of Oct. 8, DefiLlama data cited in the source showed Orca handling about $8 billion in trading volume over the previous 30 days, with traders paying about $10.72 million in fees. Of that, about $1.39 million was protocol revenue and about $514,000 went to holders. Liquidity providers take most trading fees, and the protocol then redistributes the portion it keeps.
ORCA holders can stake into xORCA, which represents a share of the ORCA held in the pool. The protocol buys ORCA in the market and deposits those tokens into the pool, increasing the amount of ORCA backing each unit of xORCA. In January this year, the governance council had already raised the share of protocol revenue allocated to automatic buyback rewards from 20% to 40%, and that change was implemented.
The buybacks have shown up in reported figures as well. DefiLlama’s quarterly table, as cited in the source, lists xORCA buybacks at about $686,000 in the third quarter and about $91,000 so far in the fourth quarter.
A new proposal would leave more revenue with the team
After the merger plan surfaced, Orca also put forward a proposal to change how protocol revenue is split.
Under that proposal, the share used to automatically buy ORCA and route it into xORCA would fall from 40% to 10%. Another 10% would be reserved for team-directed market buybacks, with repurchased tokens available for burns, reward top-ups or contributor grants. The remaining 80% would go to operations and growth.
Orca’s explanation was direct: the current revenue split does not leave enough operating capital to support expansion. Lending and investment products require staff, development budget and acquisition funding.
The proposal also reaches into community-held assets. It would place about 14.2 million ORCA into a team-controlled strategic account for acquisitions and transfer a fee treasury of about 70,000 SOL to team management. The governance council would be dissolved, while token holders would retain voting rights over any future token issuance.
That would concentrate more operating resources and decision-making power with the team.
The market may be pricing growth, while stakers face a different trade-off
Set against the acquisition timeline and the token’s price action, the ORCA rally looks more like an early bet on a larger business than a simple rerating of an old buyback story.
For existing stakers, though, the economics are changing. Expansion needs capital, and that capital would come in part from reducing the fixed share of revenue flowing into automatic buybacks. Buying ORCA to trade the merger and holding xORCA for buyback-linked rewards are no longer the same proposition.
Using current revenue as a static reference point, monthly protocol revenue of about $1.39 million means a 40% automatic buyback allocation is worth about $556,000. If that share drops to 10%, the automatic buyback pool falls to about $139,000. To preserve the earlier $556,000 level under the new formula, monthly protocol revenue would need to rise to about $5.56 million. Team-directed buybacks are separate and are not counted in that fixed allocation.
That sets a higher bar for Formation than simply adding one lending protocol. ORCA has already nearly doubled from the level cited for Sept. 30, while the proposed automatic distribution would be cut by three-quarters. For token holders, the key question is no longer just whether Orca has revenue and buybacks. It is whether the merged business can grow revenue enough to offset the change in distribution.
In a DeFi market defined by competition for existing demand, Orca is presenting mergers, lending, investment products and on-chain financing as its next path. The proposal shows the cost of that shift in plain terms: the team would gain more room to deploy capital and run the business, while token holders would accept a smaller automatic buyback stream and wait to see whether the new revenue engine can scale.