In our very first token brief, we touched on how Sanctum (CLOUD) is revolutionizing Solana’s increasingly-crowded LST ecosystem. But how did it all begin?

The answer to this lies in Jito, one of the OG liquid staking protocols on Solana that brought Solana’s LST ecosystem out of the shadows through a massive airdrop campaign, where delegating 1 SOL to Jito could’ve netted you a decent 5 figure airdrop.

Armed with this visibility, Jito now boasts the highest TVL among all other LSTs on Solana. Could this be a sign to start stacking JTO, Jito’s governance token?

Jito’s rise to eminence

Jito was founded on the idea of creating an accessible protocol for Maximal Extractable Value (MEV) staking. This concept of MEV-powered liquid staking effectively distinguishes Jito from other standard LST protocols.

To enjoy these MEV-boosted rewards, users can stake SOL in Jito’s Stake Pool and obtain a liquid stake pool token (jitoSOL) in return, which not only provides users with liquidity, but also a combination of staking rewards (block rewards + transaction fees) and MEV rewards, which culminates in a pretty decent APY of 8.02% at the time of writing.

This reward will subsequently be accrued in the token’s price, such that hypothetically, if 1 jitoSOL can be exchanged for 1 SOL now, then 1 jitoSOL can be exchanged for 1.082 SOL in 1 year’s time.

Going beyond standard liquid staking offerings, Jito has recently announced plans regarding Jito Restaking, which consists of 2 main components:

• Vault Program: Manages the creation and operation (minting, burning, and delegation) of Liquid Restaking Tokens (LRT), with any/multiple SPLs supported as the underlying asset. This allows for customizable delegation strategies across multiple Actively Validated Services (AVS).
• Restaking Program: Facilitates the creation and management of AVS.

Built with AVS in mind, Jito Restaking seeks to provide a flexible framework for networks to achieve consensus and economic security, much like EigenLayer.

JTO token distribution and utility

Jito’s governance token, JTO, launched at the end of 2023, with a total supply of 1 billion tokens and initial circulating supply of 115 million tokens.

10% of the total supply (100 million tokens) was earmarked for the airdrop, of which 90% (90 million tokens) was eligible for immediate distribution while the remaining 10 million tokens can only be claimed at the end of this year.

The token distribution was delineated as such:

• Community (34.3%): 10% was used for airdrop, remaining 24.3% allocated towards growing the Jito community.
• Ecosystem Development (25%): Fund communities and contributors that help drive the expansion of Jito.
• Core Contributors (24.5%): Unlock over 3 years with 1 year cliff.
• Investors (16.2%): Unlock over 3 years with 1 year cliff.

As for the role of JTO in governance of the Jito Network, JTO token holders are responsible for the following decisions:

• Setting fees of the JitoSOL stake pool.
• Updating delegation strategies by controlling parameters of the StakeNet programs.
• Managing the treasury of JTO tokens held by the DAO and fees generated from JitoSOL.
• Contributing to the ongoing development and improvement of Jito’s protocols and products.

Evaluating JTO

As a governance token, there is not much inherent utility to holding JTO besides participating in governance processes. But while this may be a turnoff to prospective investors looking for tokens with more utility and potential for capital appreciation, Jito is ultimately the protocol with the largest TVL on Solana, and there could still exist a bullish case for JTO!

With Jito capturing the bulk of Solana’s TVL, there will intuitively be more market participants invested in the success of Jito.

This would intrinsically motivate Jito stakeholders to participate in its governance process, engendering organic demand for JTO, as 250,000 JTO is required for submitting proposals (setting pool fees, managing treasury, integrating Jito with other protocols etc).

Having said that, herein lies a budding bear thesis, which runs along these lines: Since Jito is already such a prominent protocol in the Solana ecosystem, is there still room for growth?

A quick look on DefiLlama, however, brands this claim as mere FUD, as we can observe that the TVL of Jito (denominated in SOL to negate SOL’s price fluctuations) has been steadily increasing in 2024.

With Solana gradually entrenching itself as the go-to retail chain, I would expect this trend to sustain further into 2025.

Furthermore, Jito’s aforementioned introduction of Jito Restaking, could serve as a catalyst for the protocol’s continued growth.

To anticipate how this may play out, we can observe the state of restaking on Ethereum and extrapolate it to Solana using some moon math:

As Ethereum’s pioneer restaking protocol, EigenLayer attracted a restaking TVL of ~$13 billion 1 year after its launch, while the broader Ethereum market has a liquid staking TVL of ~$35 billion.

Solana, on the other hand, has a liquid staking TVL of ~$3.72 billion. Keeping the ratio of restaking TVL to liquid staking TVL the same, Solana’s future pioneer restaking protocol could attract a TVL of ~$1.4 billion in 1 year’s time.

Next, a quick check on Whales Market tells us that EIGEN is trading at $4.1, which works out to a premarket FDV of just under $7 billion. Keeping the FDV:TVL ratio constant, the introduction of Jito Restaking could add an impressive ~$750 million to JTO’s FDV! At JTO’s current FDV of $2.7 billion, this represents a 27.8% increase in JTO’s valuation.

On the flipside, like most new token launches, the current circulating supply of JTO is relatively low at ~125 million (12.5% of total supply). And according to the token distribution as outlined above, ~135 million JTO (core contributors and investors 1-year cliff unlock) will be unlocked in 4 months’ time.

Not only will this double the current circulating supply and result in dilution for existing token holders, but a downward pressure could also be exerted on JTO’s price if/when investors start dumping.

Action plan

With all this in mind, what am I planning to do with Jito? As a utility token loyalist, owning a governance token like JTO is not my cup of tea as I have an implicit bias towards projects that effectively ‘force’ stakeholders to own the project’s native token (paying for gas fees, service provider fees etc).

But at the end of the day, Jito is still a crucial element of the Solana ecosystem and the utility of jitoSOL is amazing.

While there exists other LSTs yielding more than jitoSOL, the beauty of jitoSOL lies in its pervasiveness, with jitoSOL pairs finding its place in Solana’s expansive DeFi landscape.

Hence, while I may not be holding JTO, I am happy earning an APY of 8% by staking SOL for jitoSOL, and taking advantage of its liquidity by LPing on various DEXes and boosting my yield.