Expectedly, Jupiter will capture a large amount of liquidity through its established ecosystem, various product suites, and sustainable revenue models.
Author: PAUL TIMOFEEV
Translation: DeepTechFlow
Revival of Solana
Solana is a proof-of-stake (PoS) layer 1 blockchain optimized for high performance and throughput to provide fast execution speeds and lower transaction costs. Its unique architecture, distinct from EVM chains, allows developers to focus on building plug-and-play applications using Rust. Solana currently supports 121 protocols in its ecosystem, maintained by 2156 validators (second only to Ethereum), and ranks fifth in total value locked (TVL) in DeFi across blockchains, reaching $1.38 billion.
In its brief but eventful history, Solana has faced and overcome many challenges, such as network instability and the risk of significant user, developer, and liquidity loss due to its precarious relationship with SBF and Alameda. Nevertheless, co-founder Anatoly Yakovenko has maintained close contact with the user and developer community, demonstrating Solana's resilience, adaptability, and willingness to overcome adversity, even at its lowest point.
In 2023, as the price of Bitcoin rose in anticipation of SEC approval for spot ETFs, the crypto market finally saw a rebound after a long period of consolidation. The price of $SOL followed suit, rising from $9.98 on January 1, 2023, to $101.51 on January 1, 2024, yielding a return of 917.134%. As $SOL continues to maintain a strong upward trend in the market, the launch of MadLads, along with the team's announcement of a points program and airdrop, has begun to attract the attention of users, investors, and developers with a unique architecture designed around "applications that can only be built on Solana."
Performance of Solana DeFi in 2023
From January 1, 2023, to January 1, 2024, Solana's TVL and on-chain transaction metrics saw significant growth. This period marked an important stage in Solana's development, with a significant increase in trading value and volume despite a decrease in TVL after the FTX collapse.
Key highlights:
TVL growth: Solana's TVL increased from $2.1008 billion to approximately $14.7 billion, a growth of 574%.
Total swaps: 314,556,244 swaps were executed on the network.
Total trading volume: The platform's total trading volume reached $420,366,925,06.
Solana's DEX monthly trading volume in December reached $23.8 billion, setting a new annual high in 2023.
Introduction to Jupiter
Jupiter was launched as a DEX aggregator on Solana in September 2021, aiming to provide Solana users with a better trading experience by delivering liquidity from multiple sources rather than a single source. While Jupiter initially started as an exchange engine, the protocol has evolved to become a crucial liquidity layer offering various products for different users and has become a key component of the Solana ecosystem.
Jupiter's business model is driven by three core pillars:
Providing the best user experience
Maximizing the potential of Solana's technological capabilities
Improving the overall liquidity situation of Solana
2023 was a busy year for the Jupiter team, as they launched several new core products, including new DCA functionality, limit orders, and perpetual contract trading. The core protocol also underwent multiple upgrades and optimizations, including upgrading algorithms (Metis), bridging comparison tools, instant staking of SOL > SOL swaps, and more development tools, including the release of the Jupiter terminal and two major API upgrades.
Review of Jupiter's 2023 Trading Volume
Jupiter's total trading volume reached $62,816,562,781, accounting for approximately 60% of all Solana DEX trading volume.
Jupiter's monthly trading volume increased from $649,258,200.00 in January 2023 to $7,106,000,000.00 in December 2023, a growth of 994.48%. After Breakpoint announced $JUP, the November trading volume exceeded $16 billion, setting a new historical high for monthly trading volume. Impressively, this increase in trading volume, mainly in the fourth quarter, was primarily driven by organic trading activity.
In this report, we will analyze Jupiter's product line and future plans, and explain the logic behind our investment approach.
AMM and Aggregator
Automated market makers (AMMs) have been a novel innovation in the digital asset space in recent years. On traditional exchanges like Coinbase or Binance, third-party entities operate to provide liquidity, enabling traders to have a counterparty for their trades. These counterparties, known as market makers, "create" a market for traders to transact and charge a spread (fee) on each trade to remain profitable.
With the emergence of AMMs, traders can deploy digital assets using mathematical and code-based market-making instead of relying on complex intermediaries. Through the use of AMMs, traders can enter and exit positions even in cases of extremely low liquidity. One drawback of low liquidity is that traders may encounter slippage, the difference between the expected and realized trade value. Traders may also lose value in trades due to asymmetric information in the public mempool, such as being front-run or sandwiched by sophisticated participants deploying MEV bots.
The emergence of on-chain aggregators aims to mitigate the impact of low liquidity trading, allowing traders to place orders and deliver liquidity from multiple sources rather than a single source. Liquidity can be sourced from various places, including AMMs; although some teams have built solutions to enable market makers to utilize off-chain liquidity (i.e., CEX positions) and assist in settling trades.
The main benefits of doing this are better pricing, as:
Transfers within CEX incur no gas costs, while on-chain transfers do
Trades are not affected by MEV extraction
Overall, aggregators aim to provide a better user experience. Large content platforms like Meta or YouTube act as aggregators of content, allowing users to view videos and images from many different websites without leaving the interface. Google aggregates information from many different websites on the internet related to your search query to provide the best matches in order of relevance. Similarly, Jupiter and other DEX aggregators source liquidity across multiple trading venues to offer better trading prices to traders.
Built on SVM
To better understand Jupiter as a protocol, it is crucial to understand the role of the Solana Virtual Machine (SVM) and how it influences the protocol design choices that developers must make.
The virtual machine can best be described as a single entity maintained by thousands of interconnected computers running specific chain (such as Ethereum) validation clients, providing the environment in which all smart contracts and accounts actually exist. To this day, most DeFi and other on-chain activities are conducted through the Ethereum Virtual Machine (EVM). However, despite being no longer in the spotlight, we believe that the Solana Virtual Machine (SVM) also has a robust architecture and will certainly continue to attract more developers seeking to build consumer-oriented applications optimized for speed and performance.
Smart contract code written in Rust, C, and C++ is compiled into BPF bytecode by the SVM. The Sealevel engine is a key component on Solana for implementing parallel processing; with the integration of state access lists in Solana transactions (providing detailed information about specific states to be accessed), non-conflicting transactions can run simultaneously, resulting in faster overall performance.
While EVM is a "single-threaded" execution environment, meaning it can only process one contract at a time, SVM is multi-threaded and can process more transactions in a shorter time. Each thread contains a queue of transactions waiting to be executed, and transactions are randomly assigned to the queues.
The emergence of L2 solutions like Eclipse and Nitro utilizing SVM execution demonstrates further potential for adopting SVM. Earlier this year, Rune Christensen of MakerDAO proposed the vision of developing a MakerDAO application chain using the Solana codebase, sparking much debate on Twitter.
One of the most common complaints about Ethereum is the increasing gas fees with growing user activity, which often leads to an unpleasant user experience, especially during bull markets. Regardless of how high gas fees are, traders have a simple demand: to get the best possible price. Aggregators like 1inch aim to provide better prices for users by sourcing liquidity from multiple sources rather than a specific DEX. However, trading on Ethereum, such as sourcing liquidity from multiple different pools, is an expensive task and may actually exacerbate the problem it aims to solve; trading on Uniswap, which sources liquidity from only one place, may actually be more advantageous.
In contrast, Solana's situation is quite the opposite; by default, gas costs less than a penny. The cost of sourcing liquidity from multiple sources is almost the same as sourcing from one source, making DEX aggregators more practical and beneficial on chains like Solana compared to EVM chains. As a leading aggregator on Solana, we believe that Jupiter is more likely to achieve significant growth and adoption in the long term, while aggregators on EVM chains face higher costs and greater competition.
The same principle applies to use cases beyond simple A-to-B swaps, such as providing structured Dollar Cost Averaging (DCA) or Time-Weighted Average Price (TWAP) products for users, which will be further elaborated below. The fundamental principle remains that low gas brings great flexibility for application developers on Solana, and Jupiter is the best example of this in practice.
Product Overview
Jupiter Swap
Like any other decentralized exchange, the most common use case on Jupiter is the simple exchange of token A and token B. Users can exchange their favorite assets at competitive prices. Slippage and priority fee settings are fully customizable, allowing users to choose direct liquidity routes, use wSOL instead of SOL, and use versioned trades (using updated, better routing algorithms).
Developers can also natively integrate Jupiter's routing algorithm into their dApps using the Swap API. For example, Kamino Finance uses Jupiter's Swap API to enable features such as unilaterally depositing assets into their CLMM vault (Autoswap).
Although we believe that the continued growth and sustainable adoption of Jupiter and Solana DeFi will eventually lead to JUP DAO voting to implement fees, currently, Jupiter does not charge any additional swap protocol fees other than basic gas fees and related DEX fees. Considering the increase in network activity driving the demand for block space and costs, as well as the potential restructuring of the Solana fee market, how this decision will be affected will be interesting. Currently, the 1inch aggregator on Ethereum does not charge swap fees, while CowSwap recently proposed a fee conversion, charging swap fees with the goal of achieving financial self-sufficiency while maintaining user incentives.
Limit Orders
If a trader believes that the price of an asset will change in the near future, they can place a limit order instead of buying the asset at the current market price. Limit orders are a type of signed information with explicit trading execution rules or "intent," providing traders with flexibility and other benefits, such as protection against slippage caused by MEV, allowing for better price settlement. This model benefits both retail traders and institutions, and Jupiter now provides a venue for traders to place limit orders on Solana.
When a user places an order to purchase $WIF worth 1 SOL, the order is ultimately matched by a keeper, a trusted protocol participant responsible for monitoring prices and executing orders. The function of the keeper is similar to the solver on CoWSwap or the filler on UniswapX. After executing the order, the specified assets will appear in the user's wallet.
Jupiter's limit order feature offers a wider selection of tokens, as long as there is sufficient liquidity in the market, token pairs can be traded. Additionally, users can specify an expiration time for the order, after which any unfilled orders will be canceled and refunded to the user's wallet.
DCA
Dollar Cost Averaging (DCA), also known as regular investment, is a common investment strategy that involves splitting capital allocation into multiple trades rather than one trade; this is particularly suitable for long-term investors who are not concerned about short-term volatility (e.g., buying $500 worth of SOL continuously for 5 days). DCA is very useful for accumulating assets in a bear market, with the principle of averaging one's entry price to mitigate volatility and gain greater returns over time and changing market conditions. Similarly, DCA can also help in profiting during a bull market; unlike immediately selling one's position in full, DCA can help diversify sales to capture any additional upside during the closing period, rather than immediately selling the position in full.
Traders can also execute Time-Weighted Average Price (TWAP) strategies to buy or sell assets. Similar to DCA, TWAP is often used for large orders that need to be split into smaller parts to prevent price impact (slippage) from a single large purchase. Since orders are executed over a period of time, they are similar to DCA strategies, meaning purchasing a "x" quantity over a certain period.
Due to Solana's high-throughput architecture, Jupiter is one of the few platforms that allows users to execute frequent time-based strategies on-chain. DCA trading on Ethereum in low time ranges (e.g., daily) could result in hundreds of dollars in transaction fees, while on Solana, it only costs a few cents. Even on L2, if a trader wants to execute 10 trades within an hour, the fees can quickly add up.
Perpetual Contracts
To further enrich its wide range of products, Jupiter also launched an LP-Traders perpetual contract exchange earlier this year. While still in the testing phase, traders can trade SOL, ETH, and wBTC perpetual contracts with leverage of up to 100x, while LPs can provide capital to earn fees.
Perpetual contracts are derivative contracts similar to traditional futures, allowing traders to take larger positions with less capital allocation (leverage) to capitalize on future price fluctuations.
On Jupiter, traders can use almost any supported Solana token as collateral to open long or short positions on SOL, ETH, and wBTC. Long positions require the corresponding asset (e.g., long SOL-USD position requires SOL collateral), while short positions require stablecoins as collateral. Traders can leverage by borrowing assets from the liquidity pool - by borrowing 1x SOL from the JLP pool, the leverage ratio for a SOL-USD position can reach 2x.
Similar to the dynamic of the GLP pool on the decentralized perpetual contract exchange GMX, Jupiter Perps utilizes the JLP pool, which includes SOL, ETH, WBTC, USDC, and USDT. Providing liquidity simply involves depositing any supported Solana token into the JLP pool in exchange for an equivalent amount of $JLP tokens. The JLP pool receives 70% of the fees generated by Jupiter perpetual contracts, and the price of $JLP grows in sync with the value of the underlying pool.
The JLP pool also benefits the larger Solana ecosystem, as Jupiter Swap is natively integrated into the perpetual contract exchange, meaning not only can any token be used as JLP collateral, but Solana traders can benefit from the increased liquidity in the JLP pool, obtaining better trade prices.
Unlike the aforementioned features, the perpetual contract exchange on Jupiter charges more fees for both traders and LPs. Traders pay fees to the pool based on the hourly borrowing fee or funding rate, which is based on the hourly borrowing rate, position size, and token utilization rate, and can be expressed as:
Funding Rate = (Borrowed Tokens / Tokens in the Pool) * 0.01% * Position Size
LPs also need to pay their share of fees for opening/closing positions and swapping different assets within the JLP pool.
Regarding the JLP pool, it should be noted that any logic that deviates token ratios from the target set for each token in the pool will incur higher fees, while logic that moves the ratios towards the target will receive fee discounts.
Decentralized perpetual contract exchanges such as GMX and dYdX, represented by their CEX counterparts, are still relatively underdeveloped and have significant room for growth and adoption. Another example of low-latency applications for perpetual contracts, benefiting from Solana's fast execution and low transaction costs, although Jupiter will face competition from mature participants in the Solana Perps space (such as Drift Protocol, 01 Exchange, Zeta Markets, Mango, etc.).
Growing the Cake: Jupiter's Vision
As the cake grows, everyone can get a bigger slice.
As an integral part of the Solana ecosystem, Jupiter benefits from helping as many new users and developers as possible join the ecosystem. In addition to providing value through outstanding products, Jupiter's goal is to empower its community and the broader Solana ecosystem through several new initiatives:
$JUP: The governance token of the new DAO (more on this below)
Jupiter Start: Balancing the need for an open-minded approach to innovation and objective criticism of poor application design is crucial for an ecosystem seeking sustainable growth, and being wary of narratives and biased teams trying to take advantage of the market.
Jupiter Start aims to be a platform between the Jupiter community and the broader Solana ecosystem to "help review, debate, understand, and highlight great new projects." This includes the Jupiter launchpad to help guide new projects, pre-listing trading availability for new tokens, and Atlas, a new public seed funding program allowing the community to invest in early-stage projects, as well as various community-centered educational project initiatives.
If you are interested in learning more about Jupiter Start, we recommend reading this blog post.
- Jupiter Labs: A collective effort between the Jupiter team, community, and DAO aimed at developing innovative products and tools for Solana DeFi. While these initiatives will start from Jupiter, they are ultimately designed to be launched and operated independently on Solana. Jupiter users will have priority access to early product testing and will be rewarded for it, with a portion allocated to JUP DAO.
The first product launched is the perpetual contract exchange, which is already live in the testing phase and has proposed sUSD, a stablecoin backed by SOL (similar to LUSD: ETH), using leveraged LST to generate returns.
More about $JUP
Jupiter announced the $JUP token at a watershed moment for Solana, a strategic decision made after the protocol reached many key milestones, including a wide and active user base, several major platform upgrades and new products, a series of ecosystem projects, and of course, belief in the future rise of Solana activity.
The maximum supply of $JUP is 10 billion tokens, distributed evenly between 2 cold wallets - the team wallet and the community wallet. The team wallet will be used for distribution to the current team, treasury, and providing liquidity, while the community wallet will be used for airdrops and various early contributors.
From day one, 15% - 17.5% of the tokens will start circulating, with 10% - 7.5% in hot wallets and 75% in cold wallets.
Here is the translation of the provided markdown:
Retrospective airdrops to the 955,000 early Jupiter users (as of November 2, 2023) and aimed at attracting new users and liquidity. Then, the DAO will vote on token unlock data, with tokens being initially locked and the unlock date set by the DAO. JUP holders will be able to vote on various key aspects of the Jupiter protocol and the role of the token, including the timing of initial liquidity provision, future emission schedules, and the projects that will be showcased on Jupiter Start, and more.
"The initial value of JUP will become a symbol of Jupiter and DeFi 2.0, just as the value of UNI is a symbol of Uniswap DeFi 1.0."
Fundamental Investment Catalysts
We have discussed the components of the Jupiter protocol, and now we can explain the long-term investment opportunities we envision.
Betting on Solana
Solana's roadmap is ambitious and exciting, and we expect ecosystem activity to continue growing in 2024, building on the momentum from the fourth quarter of 2023. We believe in this for several reasons:
More airdrops: Marginfi and several other DeFi teams ignited the Solana ecosystem with point programs launched in the early summer of 2023. The JTO airdrop intensified the existing momentum on Solana, creating a wealth effect that left many jitoSOL holders satisfied but also left many looking for the next big opportunity. Worth watching from Jupiter ($JUP) start are Kamino, Marginfi, Drift, Tensor, and more.
Firedancer: Jump Crypto's highly anticipated validator client, referred to as "Solana 2.0" by Toly himself. With the network's expansion and development, Firedancer is expected to be a long-term move favorable to Solana's performance and throughput, marking an important milestone for Solana as it increases client diversity, reducing the risk of network single points of failure. Low-latency applications will become even faster, an attractive selling point for both users and developers. With Firedancer likely to go live in 2024, we expect a lot of speculation and growing interest around this milestone.
DePin: A new area in the cryptocurrency space showcasing how tokenized assets can help decentralize real-world business models. Solana has successfully attracted many projects, including Helium and Hivemapper. Interest in DePin as an emerging area has in turn brought more positive attention to Solana, as the network demonstrates its practicality for serving more specific use cases.
Payments: Solana Pay is now integrated with Shopify, allowing merchants to accept Solana payments, meaning JTO airdrop recipients can on average buy over 2000 cups of coffee with their earnings. While there are still obstacles to overcome for shoppers to make payments in Solana Pay, the collaboration with one of the largest e-commerce platforms is a good start. Additionally, earlier this year, one of the world's largest payment networks, Visa, announced plans to pilot stablecoin settlements using Solana, testing blockchain settlement capabilities to build new products for commercial and monetary flow. Solana's high throughput, fast finality, low transaction costs, and node availability are all positives for Visa, just as Visa's brand can bring a lot of attention to Solana. If successful, we believe the stablecoin settlement pilot will mark a significant milestone in the development of real-world crypto use cases, benefiting Solana as the de facto network to achieve this goal.
The last noteworthy development is the Saga phone. While Solana's phone may not have been very successful in the first year, considering the impact of mobile integration on social media and payment applications, driving a mobile-friendly crypto environment and applications could be an exciting development in the long run. Recently, the Solana phone airdropped BONK tokens to buyers, and the team also announced the 2.0 version of the phone, including a lower price ($450) and a referral leaderboard to drive more user participation.
Challenges for Solana
While we remain bullish on Solana's long-term growth, we expect the Solana core team and developer community to address several key issues in the short and long term, which we will closely monitor:
Fee market: While Solana has now introduced priority fees, there is no native mechanism to determine "market" priority fees to help effectively limit spam senders (similar to EIP-1559). With the increasing demand for block space on Solana, more users are experiencing failed transactions, further indicating the need to upgrade the network's current fee market structure. Proposed solutions involve dynamic account fees and multi-dimensional EIP-1559, with fees exponentially increasing for accounts touching the same hotspots.
EVM competition: While we believe that in the long term, SVM and EVM will not be a zero-sum game, and different networks will focus on their respective categories, today Solana is still competing with EVM in market share and users, a huge gap that needs to be bridged (a difference of $140 million and $3 billion).
EIP-4844 aims to significantly reduce L2 costs (80-90%) and make it easier to use/deploy, which could solidify the leadership positions of Arbitrum, Optimism, and Base. Similarly, Celestia offers L2 developers more flexibility and lower costs, which could attract talent and users away from Solana.
Re-staking narratives are likely to be one of Ethereum's biggest catalysts and could bring in a significant amount of capital. Setting aside security risks, investors seeking higher returns for native L1 assets will seek opportunities for higher returns, providing Ethereum stakers with an opportunity for re-staking.
Parallel L1s: The popularity of parallel L1 chains (MoveVM, Sei, Monad) continues to rise, optimizing for speed and performance similar to Solana, but they are still young and immature. Monad, built by team members with a background in high-frequency trading, aims to bring Solana-like performance to the EVM environment, theoretically combining "the best of both," with transaction speeds of up to 10,000 transactions per second. However, these chains not only face the challenge of overcoming Solana itself but also have to compete with Neon EVM, which achieves Solana compatibility through an Ethereum-native environment. Aave recently posted a proposal on its governance forum discussing the deployment of its V3 protocol on the Neon mainnet. Considering all this, we believe Solana's resilience is its greatest strength and long-term catalyst, demonstrating its ability to overcome macro challenges (such as FTX's crash) or technical shortcomings (such as network outages).
Betting on Solana = Betting on Jupiter
The Jupiter Greenpaper states, "Our vision for the future is closely tied to the growth and prosperity of the Solana ecosystem. Our faith drives us to believe that a thriving Solana ecosystem will bring collective benefits to all stakeholders. In short, when the cake grows, everyone gets a bigger slice."
If you have any further requests or need additional translations, feel free to ask!
We believe that Jupiter's key role in the Solana DeFi space makes it a viable bet for both short-term and long-term adoption on the network. The viewpoint is quite simple: More users on Solana = More users on Jupiter. Solana's initial prosperity lasted for about a year (2021), during which protocols like Saber and Serum dominated the DEX space. Jupiter gained traction shortly after its launch, aiming to utilize on-chain liquidity of DEX, rather than stealing market share, to provide a better user experience and better pricing. However, it wasn't until the decline of the once-dominant Solana DEX Serum that Jupiter became the market leader it is today.
In 2023, Jupiter has consistently accounted for over 60% of the DEX trading volume on Solana.
Analyzing Jupiter's Business Model
Initially, Jupiter's core product was just an exchange engine optimized for better pricing, without charging additional fees to traders. As the project grew, with increasing trading volume and traders, the team introduced some new products, which now serve as organic revenue sources for the protocol through fees. We believe that the JUP DAO will naturally find ways to ensure that $JUP holders receive a certain percentage of income from these fees, as well as future opportunities from Jupiter Start and Jupiter Labs.
Limit Orders: 30 BPS
DCA: 10 BPS
- This is a unique product, and we believe Jupiter can further capitalize on it by increasing fees (around 20 BPS).
Perpetual Contracts
Opening/Closing: 10 BPS
Exchange fees: 0 - 200 BPS (varies based on pool weight)
Borrowing rate = 1 BPS/hour * token utilization %
JLP pools receive 70% of the fees generated by Jupiter perps.
External Protocols
- If a protocol integrates Jupiter's architecture into its software and charges its own fees, Jupiter will also ensure they receive a portion of the fees.
Hypothetical Scenarios
Jupiter Start: We believe it would be wise to create additional income streams for Jupiter and $JUP holders through the Jupiter Start program (i.e., Launchpad and Atlas).
Launchpad: Establish a trading flow for projects incubated or operated by Jupiter Launchpad, with a portion of the project's revenue going to the JUP DAO.
Atlas: Create an effective model to collect revenue from realized gains in public seed fund programs and distribute it to participating holders and investors.
Jupiter Labs - As proven by perpetual contract trading, Jupiter Labs supports protocols that can bring additional income to Jupiter.
Another proposal for sUSD is in the works.
An interesting question to consider here is how these initiatives will eventually be independently launched and operated, and how doing so will impact specific income streams, as described in Jupiter's documentation.
Exchange Fees
Jupiter's exchange engine has been the core product familiar and beloved by Solana users. However, as fees on Solana continue to evolve dynamically, and with more smart contracts competing for less block space, transactions will undoubtedly become more expensive. Jupiter has positioned itself to allow traders to pay priority fees for faster execution, and if this feature continues to be adopted from this point on, it is reasonable for Jupiter to charge additional fees for the services provided (no native method to calculate "base" priority fees).
Competitive Landscape for Jupiter
Overall, we believe that Jupiter is in a unique position as an aggregator, as it currently does not directly compete with any trading protocol on Solana. Nevertheless, as the Solana DEX ecosystem continues to evolve and demand for low-latency trading applications grows, Jupiter will naturally face the challenge of keeping up with the latest innovative and developing projects. Ultimately, traders want better settlements, and they will act accordingly in such a scenario.
Additionally, Jupiter faces greater competition in its other products (such as perpetual contract trading), often incentivizing teams to recreate DCA products or similar products.
The DEX landscape on Solana is constantly evolving and becoming more competitive. Outside of Solana, the competition is even fiercer.
Jupiter's competitive advantage lies in providing price settlement to users; if a protocol emerges to offer better pricing, users are more likely to go there.
- Exchanges remain the primary use case; exchange engine performance is crucial.
Niche products (Perps, Limit Orders, DCA) face stronger competition, with competitors able to offer lower fees.
Recommendations for Jupiter
More transparency on fees and income, as well as product performance data dashboards, would be helpful for investors.
JUP holders should be the primary beneficiaries of Jupiter's income streams (Limit Orders, DCA, Perps, Jupiter Start + Labs).
Consider leveraging off-chain liquidity (i.e., CEX LP inventory) as well as on-chain liquidity routing models to provide better pricing for users. Similar to 1inch Fusion, Matcha by 0x, CoWSwap, etc.
- This would apply to exchanges, limit orders, and DCA.
Ensure that $JUP holders receive a portion of the income generated by Jupiter Labs products and services.
- Ensure that Jupiter Start, either through incubating projects or supporting any team on their protocol from public seed fund, allocates a portion to $JUP holders when implementing fees.
Ensure that large-scale airdrop distributions do not dilute the quality of participants representing the JUP DAO.
Future Outlook
Given its unique position in the ecosystem, we believe that Jupiter is a viable bet for both short-term and long-term adoption on Solana.
As network activity on Solana continues to grow, we expect Jupiter to capture a significant amount of liquidity through its established ecosystem presence, various product suites, and sustainable revenue models, which should benefit $JUP holders in the long run.
As Larry Fink begins to talk about tokenizing financial assets, and L1 blockchains like Solana continue to seek product-market fit and explore new practicality and innovation, it's not too far-fetched to imagine Jupiter accommodating various new asset classes over time.
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