When asked which protocols catalyzed Solana’s airdrop season, two come to mind: Jito and Jupiter. Both protocols provided users with a decent stimmy, and both are DeFi giants on Solana.

But despite these similarities, JUP’s PA has been arguably better than JTO’s, with JUP up ~26% since launch while JTO is down ~2.6%. This brings us to the main question: can JUP continue outperforming JTO?

Unpacking Jupiter

Jupiter started off as a DEX aggregator on Solana, before deciding to get its fingers in nearly every pie.

Not only did it expand on its swap functionality by introducing DCA and limit orders, but Jupiter also diversified beyond its DEX aggregator offering to provide a whole suite of DeFi products:

• Bridging: Allow users to bridge from other chains to Solana, transfer assets from CEX to Solana, and even onramp to Solana.
• Perps Trading: Perpetual trading with Jupiter Liquidity Provider (JLP) Pool acting as a counterparty to traders.
• LFG Launchpad: Community-driven launchpad for projects to bootstrap a token on Solana. Tokens that launched / are launching soon include ZEUS, CLOUD, UPT, and DBR.
• Ape Platform: Memecoin trading platform.
• Liquid Staking: jupSOL.

Besides these, Jupiter has announced the Giant Unified Markets (GUM) initiative, and a potential mobile application.

Token utility and distribution

As a governance token, JUP can be used for voting on proposals crucial for the ecosystem, including LFG Launchpad projects, Working Group grants, and project strategy.

To vote on these proposals, JUP has to be locked, which will grant users voting power and access to Active Staking Rewards (ASR).

For the current ASR pool (which will be distributed in October 2024), the rewards include 50 million JUP derived from the fee collected from JUP’s token sale on LFG, and 75% of all other launchpad fees.

Moving on from JUP’s utility to JUP’s distribution, JUP has a total maximum supply of 10 billion tokens with 13.5% in circulation, outlined as follows:

• Team (20%): Begin vesting on Feb 2025 for 2 years.
• Strategic Reserve (20%): Will be locked for at least a year and only used for future team members, future strategic investors, and for Mercurial stakeholders (5%). Mercurial stakeholders refer to those involved in Mercurial, an AMM that served as Jupiter’s predecessor, and has now evolved to become Meteora.
• Liquidity Provision (10%):
  • Launchpad Fee: 1%.
  • Other Liquidity Needs: 5.5%.
  • Launch Pool: 2.5% (Circulating).
  • MM Loans (CEX): 0.5% (Circulating).
  • Immediate LP Needs: 0.5% (Circulating).
• Jupuary (40%): Airdrop campaigns held every January from 2024 to 2027.
  • Jupuary 2024: 10% (Circulating).
  • Jupuary 2025: 10%.
  • Jupuary 2026: 10%.
  • Jupuary 2027: 10%.
• Contributors and Grants (10%): Incentivize the community to participate in initiatives to grow Jupiter, vet projects for the Solana ecosystem, and drive the decentralized meta.

However, just earlier this month, a proposal that aimed to reduce the supply of JUP by 30% to a max total supply of 7 billion tokens, was passed. The more prominent changes include the following:

• Team: 2 billion tokens reduced to 1.4 billion tokens.
• Mercurial Stakeholders: 500 million tokens reduced to 400 million tokens.
• Liquidity Needs: 550 million tokens reduced to 0.
• Subsequent Jupuaries: 3 billions tokens reduced to 2.1 billion tokens.

By burning 30% of JUP’s supply, scarcity is effectuated, and this would theoretically exert an upward pressure on JUP’s price.

JUP: bull vs bear

Sticking with this positive vibe, let’s examine the bull case for JUP in further detail. Within Solana itself, Jupiter accounted for >40% of trade volume over the past week:

Venturing beyond Solana, it is worth noting that Jupiter’s Q2 2024 volume exceeds that of DeFi dinos such as BSC’s PancakeSwap, Cosmos’ Osmosis, Ethereum’s Curve, and more, and the only protocol that exceeded Jupiter’s quarterly volume is Uniswap.

Taking a closer look at Uniswap, as of Q2 2024, Uniswap generated $240 million in fees, and at UNI’s current price of $6.17, the ratio of Uniswap’s market cap ($4.66 billion) to annualized fee stands at 4.85.

Holding this ratio constant and annualizing Jupiter’s quarterly fee of $103 million, JUP’s target market cap is $2 billion, which is an 82% premium over its current market cap of $1.1 billion.

Metrics aside, Jupiter’s GUM Initiative may serve as yet another potential catalyst for JUP. The GUM Initiative aims to onboard a wide array of assets (memecoins, stocks, forex, RWA) on Solana and index them on Jupiter, thereby allowing users to transact across all these markets atomically.

Such an initiative would undoubtedly bolster Jupiter’s mindshare and further cement its status as the face of Solana’s DeFi ecosystem.

Back to the aforementioned ASR rewards, as more and more projects start launching on Solana, ASR may become increasingly attractive, leading to more JUP being locked, which once again, imbues a sense of scarcity.

However, it should be noted that despite experimenting with various launch strategies, the past few LFG launches are currently trading below their launch price, with the exception of JUP. If this persists, demand for LFG could evaporate, resulting in muted ASR rewards in the future.

Moreover, Jupiter’s expansion to memecoin trading via its Ape platform, can be construed by some as merely jumping on the bandwagon.

And in light of the oversaturation of trading bots on Pump.fun, leading to subdued performance of late, one can only wonder if such an endeavor will end dismally.

Evaluation

Returning to the main question at the start of this token brief, can JUP continue outperforming JTO?

Granted, this is an apples and oranges comparison, but at the end of the day, both can be rendered proxies to the Solana DeFi ecosystem, and I, for one, see more value in holding JUP than JTO, simply because there is more utility to JUP (ASR).

Furthermore, I view Solana as a chain for retail degens.

While Jito is more focused on liquid staking, which is more appealing to passive yield farmers, Jupiter’s expansive yet sophisticated offerings (DCA, limit orders, Perps trading, memecoin trading) is ostensibly more germane to Solana’s user base of degens.

Finally, Jupiter also beat Jito at its own game by offering a competing MEV-boosted LST, jupSOL, which is offering a higher yield of 9.34%! Just like jitoSOL, jupSOL has pretty decent liquidity throughout Solana’s DeFi ecosystem, and degens can deposit jupSOL on Kamino as collateral for carrying out leveraged trading strategies.