Jupiter DEX voting to decide on JUP token reserves enters final hours

Jupiter DEX will announce the fate of more than 200M JUP tokens later today, based on the result of a community vote. 

Jupiter, the Solana DEX aggregator, is almost at the end of its community vote on the distribution of excess tokens from Jupuary. The community decision has attracted 299,671,743 votes, five times more than the minimum of 60K votes. 

Jupiter is one of the Solana-based projects with the strongest emphasis on community decisions, as the platform also distributes 50% of its earnings to the community. The spare JUP tokens come from unclaimed airdrop rewards during the Jupuary campaign in early 2024.

Around 215M tokens are at stake, either to be burned or recycled into the ecosystem. In one case, the tokens will be awarded for active staking and voting. They could also be returned to the community multisig, slightly increasing the share of rewards based on Jupiter’s fees. 

The vote does not reveal the current preference to avoid attacks. However, the Jupiter team recommends using the tokens for another year of active staking rewards (ASR). The rewards will bring more alignment by encouraging active voting on Jupiter issues. The Jupiter community is also growing and there were also calls to boost the available ASR.

ASR creates slightly higher potential selling pressure compared to a burn. However, Jupiter DEX has distributed several quarterly ASR installments, while retaining a price range close to $1 while enjoying several rallies in the past year. ASR tokens are also held for a cooldown staking period of 30 days, which is a mechanism to decrease selling pressure.  

In October, there will be another ASR event to redistribute tokens. If the vote is in favor of using the spare JUP, there will be more events extending into 2025.

Jupiter attracts small-scale traders

Jupiter DEX aggregator still mostly relies on Raydium, Meteora, and Orca, with a constant flux for smaller Solana markets. At the end of September, Jupiter saw a prevalence of orders under $100, driven by a spike in Raydium DEX activity. 

Jupiter continues to draw traffic from the launch of new and highly active Solana meme tokens. The aggregator carried more than 1.7M trades under $100 in the week ended September 23. The inflow of small-scale traders happened after Jupiter introduced dollar-cost averaging orders. At the end of September, the aggregator also added limit orders straight from the app.

During the same time period, in-person trading also increased as traders managed to compete with bot-driven traffic. Jupiter has already hosted more than 13M trading wallets, with more than 599K swaps completed.

In the past month, revenue generated from fees decreased for Jupiter, but the aggregator still manages to achieve up to $1.5M weekly. Fees and their redistribution are one of the main points of community votes, hence the requirement to hold JUP, stake, and get involved in the ecosystem.

Jupiter DEX expands to record value locked

Jupiter also locks in its own liquidity, recently reaching a new record of $1.26B. The value locked already exceeds the project’s market capitalization of $1.21B. 

More than 377M tokens are locked and used in active staking, accruing another 50M JUP rewards for the last quarter. Based on this ASR schedule, the spare JUP that are currently voted on can supply the ecosystem for another year of quarterly rewards. 

JUP may feel some pressure from the presence of unlocked tokens. Currently, 66.11% of the tokens are fully unlocked, with most belonging to the community. After February 2025, JUP unlocks will accelerate, and the team allocation will be released gradually. 

The market expects to absorb up to 10B tokens in total, of which 1.3B are currently in circulation. Voting on the extra 200M to be burned will have a limited effect, and ASR tokens may also not be sold immediately. 

Following the news of the vote, JUP retained its position around $0.90. Open interest increased in the past day, moving up from recent lows of $49M up to $63M. JUP traders remained predominantly within long positions, despite the recent liquidations. 

JUP peaked at $1.80 during the March market peak but has remained above its baseline price. JUP does not behave like a typical airdrop token, as the community has incentives to hold. 

Cryptopolitan reporting by Hristina Vasileva.