Jupiter's Community to Vote on Major Token Supply Reduction

The community of Jupiter, a decentralized exchange aggregator on the Solana blockchain, is set to vote on a significant proposal to reduce the total supply of its JUP token by 30%. The voting process begins on August 1 and seeks to decrease both team allocations and new token emissions by the proposed percentage.

Rationale Behind the Proposal

This initiative, first suggested in June, aims to address concerns about the high rate of JUP's token emissions. Meow, Jupiter's pseudonymous founder, described the supply reduction as a measure to "cut the fat" from the project’s fully-diluted valuation, thereby mitigating inflation and stabilizing the token’s market dynamics.

Current Token Distribution

JUP currently ranks as the 68th largest cryptocurrency, with a market cap of $1.3 billion and a circulating supply of 1.35 billion tokens. Notably, one billion JUP tokens are allocated for community distribution through annual airdrops over the next four years, which could lead to substantial inflation.

As of July 31, 780 million JUP from the first airdrop had been claimed by nearly 640,000 users, with the remaining 220 million JUP returned to the community wallet. Additionally, the Jupiter team has a reserve of four billion JUP, split between strategic reserves and team allocations, with a two-year lock-up period starting from February 2024. The core team also received 450,000 USDC worth of JUP as compensation for the first year.

Token Supply Management and Community Commitment

Meow detailed a manifesto on July 31, focusing on ensuring that the community "eats first." The document outlines that team tokens, initially scheduled to unlock in the first year, will now be staked for an additional two years. Both Meow and co-founder Siong committed to locking their tokens until at least June 2026.

Most team members have also pledged to lock up the majority of their tokens, only liquidating what is necessary for personal financial security from February 2025.

Additionally, the community will receive at least three months' notice before any strategic reserve tokens are released, ensuring transparency and proportional sales relative to market liquidity.

Current Market Performance

Jupiter has seen a decline in trading volume, from over $1 billion in Q2 to maintaining at least $200 million throughout July, according to DeFi Llama. The protocol’s total value locked (TVL) stands at $599.4 million, ranking it among the top 10 protocols on the Solana network.

However, the price of JUP has dropped by 43% since reaching a local high in April, based on data from The Defiant.