Why you shouldn't hold $JUP
My Bull thesis for Jupiter
Token Price Syndrome
Think about Walmart. There are two kinds of people—investors who buy Walmart stock and consumers who buy things from Walmart. The retail market is very competitive, so Walmart has to give discounts to keep its market share. Investors don’t like this because it means lower profits, but consumers love it because they save money. Since the number of consumers is much bigger than the number of investors, the overall sentiment stays positive. For investors, this may lead to more returns in long term, if they ignore the short term bleeding.
But in crypto, it's the opposite. The number of people who buy a token like Ethereum or EigenLayer is much higher than the number of people who actually use Ethereum L1/L2s or EigenLayer. If an app does something to gain market share or does something that incentivizes team and builders —like reducing fees, increasing team supply, or giving smaller airdrops—the sentiment turns bad. Even if it helps the project long term, investors react emotionally. People start tweeting “Devs do something!” without thinking. The focus is always on price, not actual growth or usage. I genuinely don’t understand this obsession.
Web3 apps are still in their early stages. Similar to how some traditional companies have burned cash reserves to gain market share like Amazon and OpenAI, Web3 projects often provide grants and spend heavily, sometimes selling tokens, to grow their platforms. Yes, most of the projects are cash grabs, but, good teams are building products for long-term success. If you're upset that their token is down 50% over 30 days, that's your problem. Why did you buy it? Just exit and don't complain. You should have bought at a fairer valuation. These projects aren't here to satisfy you with immediate token appreciation.
What is Jupiter doing?
Jupiter is a decentralized exchange (DEX) aggregator on the Solana. It helps users swap tokens by finding the best prices across various DEXs with isolated liquidity, so users don't have to check each one themselves with great UX. Jupiter also offers features like limit orders, dollar-cost averaging (DCA), and oracle based perpetual futures trading with leverage. They're working on a Giant Unified Market (GUM) via Jupnet, aiming to combine assets, liquidity across all the chains. (Aggregate EEVVERRYTHING!! and become a super-app)
Why would any app need a token? If there is, why would you buy?
Take a look at this article by Kyle Samani from Multicoin capital. They say holding the token of a protocol that does not manage risk and that can be forkable (can be copied) is useless, (Ex: Uniswap). Tokens that manage risk (Ex: AAVE or Maker) capture value. While I completely doesn’t agree with their thesis, ultimately, a protocol token appreciates only when the profit/fees it generates make an uptrend, just like web2 stocks.
But an important point to note is, your protocol_1 which can be forkable (copied) is a ticking time-bomb. Even if protocol_1 has good market share, some new protocol_2 can be created which mimics protocol_1, be a little more innovative, add airdrop incentives, build a community and they are good to go. They just diluted the sector and your profits. I can give example of Lido, previously Rocketpool have early mover advantage in Liquid Staking, yet they lost to Lido. MagicEden over Solanart. (No hate, Lido and MagicEden both have an incredible team). Also, Study Hyperliquid. Basically, user retention is difficult in crypto. You need to constantly improvise your tech / give incentives (token down only), and still be able to generate a revenue uptrend (important), then and only then your token price appreciates, and holding your token makes sense.
Airdrop and Tokenomics
Now a days, having an app and not doing an airdrop is a crime for users. Doing a linear airdrop is a crime for shrimps. Doing a tiered airdrop is crime for whales. In addition to this, doing an airdrop slightly benefits the cash grab founders as it creates a token liquidity pool which they can dump after their vesting. So, what is a good airdrop / tokenomics strategy? How much percentage of supply should be split between team - VCs - community?
Everyone of those three are either deserving or greedy, any way to find a Nash Equilibrium that satisfies everyone? If there is a wannabe successful app, should they care about satisfying everyone? After the airdrop, should they care about token price or just build in silence? Most importantly, will the users be using the app after the airdrop or move the capital to farm somewhere else?
Fact: Believe it or not, the most ROI given L1, Solana has a tokenomics pie chart like this, yet, it has an enormous and thankful community. VCs and team too are happy and striving everyday to IBRL. They did a coinlist public sale, not an airdrop. Imagine how outrageous CT would be if they TGE at this point, lol.
Jupiter Airdrop !!
End of 2023, I was shocked to hear that Jupiter is going for a token distribution split of 50% - Team and 50% - Community. This was made possible as Jupiter raised minimum $ and mostly bootstrapped themselves. Generally, other teams announce one airdrop of max 5-10% supply and put 10-15% under “community initiatives” and wouldn’t tell anything more regarding that “initiatives”. Out of 5B tokens for community, there will be four massive airdrops of 10% each, on Jan 31st of every year for four years straight. 40% airdrop!! I haven’t seen one profile in twitter complaining about airdrop, it was a goated distribution fr.
I started thinking, is it good or bad? Uniswap, dydx also did massive airdrops during DeFi Summer, how are their market share % now? Meow (Co-founder of Jupiter) always speaks about “Community feeling appreciated”, Do you need to give 40% of ownership to community to make them feel appreciated? Anyone can build an aggregator (no fees for swap at that time btw), lot of competing perps platforms. What is so special about Jupiter? Jupiter is a cash cow but $JUP is just a governance token. I had thoughts to swap my airdrop $JUP for $SOL. But luckily I didn’t, for some reason.
I expected LFG can become very successful, and also the team knows what they’re doing. I also like meow’s cat personality tbh. I came across his website meow.bio, where he talks about life, Jupiter etc, which is interesting, funny and inspiring at the same time. Maybe I thought I can sell all my $JUP at some later time for more bucks in bull market.
ASR - Jupiter’s North Star
ASR short for Active Staking Rewards, where Jupiter incentivizes JUP stakers and voters for running governance. Meow tells it creates a cycle where active voters get more voting power, making the governance vibrant by growing the Jupiter voter base. 50M $JUP is linearly distributed every quarter based on your voting power and participation rate, making it 200M yearly. I thought it adds a lot of sell pressure and not sustainable. I didn’t understand the need of giving away more tokens even after massive 40% airdrop. But, After 4 quarters of Jupiter DAO governance + ASR, anyone will definitely have to admit it was a huge success.
DAOs in general are just namesake. Most of the voting power is concentrated among the team. Also, there will be a delegate system where you trust a delegate and give your voting power to him, and you are not participating in governance actually. But Jupiter DAO is completely opposite. This was made possible due to giving away most of the JUP to community. Have you ever seen any DAO where almost every person committed to DAO engages in organic discussions? (Some discussions are just crying about price of $JUP, let’s exclude them). Research forums, Twitter, YouTube or wherever you go, be it praising or bashing or having fun. There are votes for key decisions like airdrops as well as fun votes like, What is the cutest animal? Every cadet has an ownership in Jupiter and they are entitled to feel they own some part of it. They have many Content Mafias, Working groups, analytic platforms (catalytics.pro is amazing for stats). Jupiter DAO is THE best DAO. Period.
I feel that Jupiter’s North Star is not their high speed swaps with minimal slippage or their JLP token or their perps platform or their massive Jupuary airdrops. Their real north star is ASR. ASR isn’t praised enough, it will create another vibrant cycle which is very positive for Jupiter platform, which is the user retention cycle. Voters feel the ownership of Jupiter and tend to use the platform more. New users can get incentives too via airdrops, they will start participating in governance, continuing this cycle forever.
So, why you shouldn’t hold $JUP?
I was talking about user retention as a key problem for apps previously. But, it looks like Jupiter has solved the user retention problem. It has a massive revenue stream from multiple verticals. App in Solana that generates the most fees is Jupiter (it used to be pump.fun few weeks ago). But why shouldn’t you hold JUP?
Fast forward to 2025 January, Jupiter is still a cash cow. Catstanbul event was great. 50% Buyback is unexpected and shows alignment. They announced Jupnet, which is Solana’s answer to Hyperliquid. They announced 30% burn. (What !! I think this is more due to community asking about price due to token price syndrome I talked about at the start)They announced fees for aggregation (more revenue !). Meow wanted more supply (Proposal 555) for locking in, which is very fair in my opinion. By 2030 (5 years), he gets 500M JUP (7% of the total supply), with a price target of 5 $ per JUP. But, Given the massive revenue and user retention, doesn’t meow’s price target 5$ by 2030 seems bearish? (2030 is an eternity according to CT).
If you think deeply, user retention for Jupiter comes at a cost of $JUP! I think the $JUP that was bought back will also be used for ASR and Airdrops given it’s success. All these incentives are additional sell pressure. Considering current price of 0.5$, 5$ is 10x in 5 years. (Yeah it’s a lot, but not according to CT). But there is a way to make it 40x. What!!?? Just stake and vote.
My Thesis (Predictions) :
Litterbox (bought back JUP from 50% fees) collects ~1.5 B JUP in the next three years. (Jupuary allocation would be over by then)
There will be a vote to clean the Litterbox, distributing JUP back to cats i.e, three Jupuaries + ASR for three year period. (Three year cycle is repeated again, but with smaller airdrop now).
Active voters will leverage their voting power to allocate more JUP to themselves during airdrops than they deserve, compared to incentivizing traders with volume. (Similar to last Jupuary vote)
Apart of $JUP price appreciation, your number of $JUP tokens also becomes ~4x (minimum) by the end of 2030, just by actively voting. JUP to 5$ mean you got a juicy 40x from current price of 0.5$.
Given the need for JUP incentives to keep the big market share Jupiter has right now, voting with a mere voting participation percentage of 75%, my amount of JUP 1.5x ed, from ASRs and last Jupuary. If I have 1000 JUP, at this rate I will have 8000 JUP at end of 5 years from being active in governance. But a good approximation is 4000 JUP after 5 years.
Once Solana mania comes back, I believe Litterbox will become massive and fuels ASR and Jupuaries even after next three years. Litterbox collected 15M JUP in a month during the times of despair (post Trump, post Libra), imagine how much JUP would be there in it after three years. Not to mention, I expect Jupnet to be released by end of this year with Jupiter’s own validator set (Hope they don’t make it centralized like Hyperliquid) which aggregates liquidity from all chains, will create a lot of upside potential.
Conclusion
If you are either staking JUP but not voting, or holding JUP in wallet or exchange, sorry to say this, it’s better for you to swap to $SOL for better ROI. Otherwise, your ownership is slowly just getting diluted. It’s useless to have JUP and not participate in governance. Go, stake and vote right now at vote.jup.ag.
We definitely have to appreciate the Jupiter’s team for what they are doing for userbase. They have massive revenue, they could have simply kept everything with them, sell to $USDC like pump.fun. But they chose not to, instead they are making Jupiter a community powerhouse. Jupiter’s leadership is a constant target for criticism, I believe we aren’t appreciating them enough for what they have accomplished by making a great product and making us a part of it.
Signing off,
babloo,
another bad cat.