As a hot star in the Solana ecosystem, Jupiter has quickly gained a foothold in the DeFi field. However, on the other hand, without a sound economic model and stable token price support, it is easy to fall into a death spiral, which could have a fatal impact on Jupiter itself.

In the past week, the Solana chain has been booming, and Jupiter's token $JUP has also nearly doubled in the secondary market, closely following the pace of Solana in the past two weeks.

In the market, research on Jupiter and $JUP is more from a secondary perspective. Behind the eye-catching (or temporarily eye-catching) market value performance, in addition to excellent market makers and community support, it also relies on its excellent product design as a support. So today, let's take a look at Jupiter's product design from a product perspective.

In the Solana ecosystem, Jupiter's emergence is not accidental, but a strong proof of technical innovation and user experience optimization among many DEXs. As the most competitive DEX on the Solana network, Jupiter is one of the main choices for Solana traders.

Three Core Functions of Jup

The key to its product's attention lies in three core functions: liquidity aggregator, limit orders, and DCA/dollar-cost averaging. The application of these three innovative technologies not only enhances Jupiter's competitiveness, but also sets a new benchmark for the entire DEX track.

Core Function Module 1: Liquidity Aggregator

Jupiter's liquidity aggregator technology is one of its core competitive advantages. In the traditional DEX model, the liquidity pools of each exchange exist in isolation. When users exchange assets, they often need to find the best trading pool themselves to obtain the best trading price, which is not only time-consuming and laborious, but also difficult to ensure the optimality of the transaction due to dispersed liquidity. Jupiter's liquidity aggregator technology can cross multiple liquidity pools within the Solana ecosystem, automatically find and aggregate the best liquidity resources through algorithms, and provide users with a one-stop best trading path.

Before trading, users can choose to modify parameters such as transaction fees, slippage size, and whether to use a direct path. This means that users can obtain the best trading price and the lowest slippage in the entire ecosystem on one interface, improving the efficiency and economy of asset exchange. Jupiter's trade aggregation is based on its backend intelligent routing technology.

On the backend, Jupiter monitors and analyzes market trading data in real time, including price, depth, slippage, and other dimensions. Based on this data, the intelligent routing algorithm can dynamically select the best trading route for each transaction, ensuring the success rate and cost efficiency of user transactions even in the case of market volatility. Specifically, once Jupiter obtains market data, its multi-path search algorithm will start to find the best trading path.

This process involves complex calculations because it not only considers direct trading pairs, but also analyzes whether better trading prices can be obtained through a series of intermediate token conversions. For example, if a user wants to exchange token A for token C, the intelligent routing will not only consider the direct A→C trading path, but also consider possible intermediate paths such as A→B→C or A→B→D→C, in order to find the lowest cost trading solution.

Although the technology behind intelligent routing is very complex, Jupiter is committed to providing users with a simple and easy trading experience. The operation of intelligent routing is completely transparent to users, and the remaining work is automatically completed by intelligent routing after users input the tokens and quantities they want to exchange. This design maximizes the reduction of user operational difficulty, allowing users to easily trade even without a deep technical background.

Core Function Module 2: Limit Orders

Jupiter provides traders with the function of limit orders, effectively avoiding the cost increase and slippage problems caused by price impact during trading, while also avoiding MEV issues. When not fully executed, limit orders can be partially executed and obtain the tokens for the executed part. When submitting a trade, users can choose the order validity period, exchange price, and exchange quantity to more accurately execute their trading strategy. The protocol cooperates with Birdeye and TradingView, with Birdeye providing on-chain price data for tokens, and Jupiter using TradingView's technology for chart data display. This feature makes Jupiter's actual experience for users closer to that of centralized exchanges.

Core Function Module 3: DCA Dollar-Cost Averaging

Dollar-Cost Averaging (DCA) is an investment strategy in which investors average the purchase cost over a specific time interval through multiple investments to a preset price range, which can help investors reduce the risk of investing at a single price point. When conducting DCA dollar-cost averaging in Jupiter, users only need to set the purchase frequency (Jupiter provides a minimum frequency of minutes and a maximum frequency of monthly), purchase price range, total time period, and the assets they wish to purchase. After the investment, the user's tokens will be transferred to an account related to the investment, and trades will be automatically executed based on the preset price range and trading frequency.

After the investment period ends, the tokens will be automatically transferred back to the user's wallet, and the protocol charges a fee of one-thousandth for the investment. Controllable cost price, low fees, and fully managed trading processes make DCA a good choice for traders to accumulate assets in a bear market. However, in a bull market, this mechanism is relatively less in demand.

Other Ecological Modules of Jup

Upstream Incubator: Jupiter Labs

An independent laboratory operating separately from Jupiter, which will operate independently in the future, dedicated to promoting innovative projects. Jupiter users and community members enjoy certain privileges, including priority usage and token incentives. Currently, Jupiter Labs is focusing on two major project areas: perpetual contracts and the LSD stablecoin.

Derivatives Protocol: Jupiter Perpetual

This is a derivatives protocol launched by Jupiter Labs, with a model similar to GMX V1, and it has entered the practical usage stage. The protocol defines two main participants: liquidity providers and traders. Liquidity providers contribute funds to the pool, which are converted into a basket of tokens, mainly including BTC, ETH, SOL, USDC, and USDT, with SOL and USDC accounting for a higher weight and becoming the main trading objects.

When traders engage in leveraged trading, they use the tokens in the pool to establish leveraged positions, without worrying about trading slippage, only needing to pay trading fees and borrowing fees, the latter of which is calculated based on the token utilization rate. Liquidity providers receive 70% of the trading fees and all borrowing fees, but they also bear the risk of traders' profits and token depreciation losses.

LST Stablecoin Protocol XYZ

This project has not yet been launched. The protocol is similar to Lybra V1, allowing users to mint interest-bearing stablecoin SUSD by collateralizing SOL without borrowing interest. The income obtained from LST collateralization will be distributed to SUSD holders and governance tokens. The special feature is that when the LST yield is higher than the SOL borrowing interest rate, a leverage arbitrage strategy will be adopted to maximize the income.

In addition, the protocol also introduces a redemption mechanism to maintain the stability of SUSD's price, although this may have an impact on borrowers' positions, especially during market fluctuations. To mitigate this issue, the protocol may adopt a strategy of redeeming SUSD with governance tokens within a small price range, to reduce the frequency of borrower redemptions when the price of SUSD is between $0.95 and $1. However, this approach may lead to the majority of redemptions being in the form of governance tokens, and if the price continues to stay below $1, it could cause significant token inflation.

Returning to the $Jup Economic Model

The JUP token is the governance token in the Jupiter ecosystem, allowing token holders to vote on key ecosystem decisions, covering topics such as project launches, dispute lists, and grants. The Jupiter team has committed to strictly adhering to the roadmap for token distribution, with any transfer of tokens from cold wallets requiring a six-month advance notice. The initial circulating supply is adjusted to 1.35 billion, and the future circulation will be managed through a community multi-signature wallet to ensure the healthy development of the Jupiter ecosystem.

After the High-rise - Reflections on the Prosperity of the Jup Ecosystem

Compared to other DEXs in the Solana ecosystem, Jupiter demonstrates advantages in trading efficiency and user experience. Despite projects like Raydium, Orca, and Serpent also competing for market share, Jupiter still aggregates over 50% of the trading volume on Solana, making DEX a true underlying liquidity protocol on the Solana network. However, with limited room for further growth in trading volume, Jupiter has chosen to horizontally expand in the DeFi sector, broadening its business breadth as a long-term strategy. Jupiter Start or the expansion of Jupiter's territory is the main direction.

Currently, Jupiter Start only has introductions, education, and pre-launch functions. The core function of Jupiter Start, LFG Launchpad, has not been launched yet, but the first round of launchpad voting was initiated on March 7, with the top three projects being Zeus Network (cross-chain communication), SharkyFi (NFT lending protocol), and UpRock (DePIN). Jupiter has a large user base and strong traffic effects. Considering its own resource advantages, the projects it launches may have high quality.

On the other hand, the financial innovation product incubation platform launched by Jupiter, Jupiter Labs, fills the gap in related projects on Solana and still has great potential with Jupiter's support. The project demonstrates a deep exploration of financial derivatives and stablecoin fields, aiming to bring new momentum to the DeFi sector in the Solana ecosystem. However, while these innovations increase returns, they also bring additional risks, such as protocol risks and oracle pricing risks, which need to be balanced through the construction of a sound economic model, appropriate incentive mechanisms, and dynamic redemption strategies.

As a hot star in the Solana ecosystem, Jupiter has quickly gained a foothold in the DeFi field despite its recent launch. Its user-centric product design philosophy, comprehensive and innovative product features, and smooth trading experience have successfully gained the trust of users, making it the largest DEX in terms of trading volume on the Solana chain. In addition, the Jupiter team strives to break through the limitations of traditional DEXs imposed by the development of public chains, actively exploring broader development space, giving Jupiter the potential to grow into a vast and influential entity.

However, the potential problem that arises is that in exploring derivatives and stablecoins, whether as an incubator or a self-developed product, they will face greater risks. Because these financial products achieve high returns through leverage, without a sound economic model and stable token price support, it is easy to fall into a death spiral, which could have a fatal impact on Jupiter itself.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。