Jupiter (JUP) Jumps 7% After Sudden Proposal to Burn 30% of Supply

The price of JUP, the native token for Solana-based decentralized exchange aggregator Jupiter, rose 7% in the hours leading up to press time. The increase is largely due to a new tokenomics proposal by the Jupiter team, which could reduce the JUP supply by as much as 30%.

Jupiter’s lead developer, Meow, unveiled the new proposal on Tuesday, labeling it a “quick and dirty plan” of what the team plans to unveil in more detail before voting by JUP holders in July. Under the proposal, the total JUP supply will be lowered from its current value of 10 billion tokens to 7 billion.

With this diminished supply, Jupiter’s fully diluted market cap value (FDV) would stand at around $5.3 billion. Such a market valuation technically gives JUP more room for growth, with its often-compared competitor, Uniswap (UNI), currently having an FDV of $10 billion.

Other Key Details of Jupiter Tokenomics Update

As revealed by Jupiter’s lead developer, the reduction in supply will also impact the number of tokens designated to the protocol’s developers. The team will now receive 30% fewer tokens than it was already assigned, while 30% of the community supply earlier scheduled for annual rewards for JUP holders will also be cut by the same value.

Meow explained that the modified tokenomics is designed to “activate the [Jupiter] community to really understand JUP tokenomics.” It will also purportedly “address concerns around high levels of emissions and motivate everyone towards growing the meta together.”

As covered in our in-depth Jupiter guide, the protocol does not have an inside team of investors. Rather, the token supply is largely split between the team, community, and ecosystem incentives.

No time for an essay, so here’s the quick and dirty draft of the J4J plans:

1. JUP Proposal
– Propose 30% reduction in JUP total supply
– Team will voluntarily cut 30% from their assigned allocation
– Corresponding 30% reduction in Jupuary emissions
– Possible because we don’t… https://t.co/rt5JA9UMb2

— meow 喵 (@weremeow) June 19, 2024

Evidently, time will reveal whether Jupiter’s proposal will pass community voting and how much it could impact the price of JUP in the long term. Nonetheless, the news appears to have been well-received at the time of writing. Defying market conditions, JUP is trading at around $0.77 at the time of writing, with its market cap climbing back above the $1 billion mark.