Analysis of the second Token disposal proposal for Jupiter, where will the 190 million dollars of JUP go?

Original | Odaily Planet Daily (@OdailyChina)

Author | Azuma (@azuma_eth)

The largest Decentralized exchange on Solana, Jupiter, is pushing for its second major vote (J4J #2) on the disposal of its token JUP, and the voting result will directly determine the disposal of about 215 million JUP (about $190 million).

In early August this year, the Jupiter community passed the first major vote on JUP disposal (J4J #1) with a 95% approval rate. The vote decided to destroy 3 billion JUP (30% of the total supply) to reduce Jupiter’s maximum supply.

According to the plan mentioned by meow, the founder of Jupiter, Jupiter plans to initiate three J4J JUP disposal votes to address the issue of excessive FDV of JUP, establish the best transparency in token distribution, and allow the community to vote on the potential issuance of JUP.

The proposal currently being pushed forward is the second of the three important votes, namely J4J #2.

The background of this proposal is that Jupiter executed an Airdrop activity called Jupuary earlier this year, and due to the fact that not all Airdrops have been claimed, there are still about 2.15 billion (215,461,850.21) JUP remaining. Based on the current market price of approximately $0.88, the total value of this portion of JUP is as high as $1.9 billion**, which is an asset that cannot be ignored by any protocol.

Last night, Jupiter founder meow initiated a governance proposal on the governance forum on how to dispose of the 215 million JUP. The proposal mentions three disposal options in total:

• Use Token for the future one-year active stake reward (ASR) plan;
• Destroy Token;
• Return the Token to the community Multi-signature Wallet.

meow mentioned that currently the Jupiter team is more inclined towards the first option because ASR has successfully proven in the past few months that it can drive community engagement in every proposal, discussion, and vote, so investing funds in ASR can help the Jupiter community continue to rise.

In the following text, we will simply count the specific scale of ASR and calculate the reward increase effect of the above scheme on the existing ASR plan.

ASR, directly translated, means ‘Active Staking Rewards’. ASR is a stake and governance reward mechanism designed by Jupiter, aiming to reward community members who stake JUP and actively participate in governance, voting, and discussions, encouraging them to integrate more deeply into the Jupiter ecosystem.

The reward for ASR mainly consists of two parts. One is the 0.75% LFG Launchpad fee (which comes from specific LFG issuance projects and therefore includes multiple tokens). The other part comes from the initial allocation of 100 million JUP provided by the treasury.

In early July this year, Jupiter distributed the first round of ASR rewards, totaling 50 million JUP, to all community users who voted on proposals between March and June this year. Now there are still 50 million JUP remaining in the ASR plan, and it is planned to start distributing them to community users who have voted on all proposals between July 1 and September 30 in October.

Judging from the results of the past two quarters, ASR has played a significant role in stimulating community activity.

As of the publication of meow, a total of 585,000 Addressstake 361 million JUP; after 12 rounds of voting since the launch of the plan, an average of 280 million JUP can be attracted for each voting; a lot of discussions and suggestions can be seen on the relevant governance pages of each voting.

Therefore, to maintain the ASR incentive, meow and Jupiter team suggest that the 215 million JUP mentioned above continue to be used for ASR incentives for the next year, with an average release of 50 million JUP per quarter, and the remaining 15 million surplus will be temporarily returned to the treasury and used for specific future needs.

Based on the current ASR stake scale as a benchmark for static calculation, 200 million JUP coins will be invested in the ASR incentive pool, which means stake users with 361 million JUP can enjoy a guaranteed return of 55% in the next year —— excluding other profits derived from the 0.75% LFG Launchpad fee.

Clearly, the plan is sufficient to continue to ensure the attractiveness of the ASR plan, and thus maintain the community’s willingness to participate in the development of the Jupiter protocol.

It is precisely for this reason that Meow and other members of the Jupiter team have taken a clear stance on this proposal and called on the community to vote accordingly.

However, this does not mean that this proposal will definitely pass. Among other potential options listed by meow, the ‘direct destruction’ option is also considered by some community members to be more in line with the interests of all JUP holders, not just stakeholders. However, considering that the users participating in the vote are stake users directly linked to ASR incentives, the probability of the first option being approved is still higher.

According to the current timeline, the proposal will begin voting at 15:30 UTC on September 27th (23:30 Beijing time). Odaily will continue to follow.