Coin is about to be released, comprehensive analysis of Jupiter’s products and business model

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深潮TechFlow
2 months ago
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Jupiter is expected to capture significant liquidity through its established ecosystem presence, diverse product suite, and sustainable revenue model.

Original author: PAUL TIMOFEEV

Original compilation: Deep Chao TechFlow

Solanas Revival

Solana is a proof-of-stake (PoS) layer 1 blockchain optimized for high performance and throughput to provide fast execution speeds and low transaction costs. Its unique architecture is significantly different from the EVM chain, allowing developers to focus on building plug-and-play applications in Rust. Solana currently supports 121 protocols in its ecosystem, is maintained by 2,156 validating nodes (second only to Ethereum), and ranks fifth in DeFi total value locked (TVL) across blockchains at $1.38 billion.

Solana has faced and overcome many difficulties in its short but eventful history, such as network instability, dangerous relationships with SBF and Alameda that resulted in a massive exodus of users, developers, and liquidity. Still, co-founder Anatoly Yakovenko is tightly connected to the user and developer communities and remains positive and forward-thinking even at the lowest of times, demonstrating Solanas resilience and willingness to adapt and overcome adversity.

In 2023, the crypto market finally rebounded after a long period of sideways trading as Bitcoin prices rallied around expectations of the SEC approving a spot ETF. The price of $SOL followed suit, rising from $9.98 on January 1, 2023 to $101.51 on January 1, 2024, a return of 917.134%. As SOL gradually continues its strong upward momentum in the market, MadLads minting goes live, the team announces points programs and airdrops, and an emerging narrative designed around a unique architecture of “applications only possible on Solana” begins to attract users , investors and developers take note.

Solana DeFi Performance in 2023

Solana’s TVL and on-chain transaction metrics both increased significantly between January 1, 2023, and January 1, 2024. This period marked an important stage in Solana’s development, with transaction value and volume increasing significantly despite a decline in TVL following the FTX crash.

Key highlights:

  • TVL Growth: Solanas TVL grew 574% from $210.08 million to approximately $1.47 billion.

  • Total exchange volume: 314, 556, 244 exchanges were performed on the network.

  • Total trading volume: The platform’s total trading volume reached $420, 366, 925, 06.

Coin is about to be released, comprehensive analysis of Jupiter’s products and business model

Solana’s DEX monthly trading volume reached $23.8 billion in December, setting an annual high in 2023.

Coin is about to be released, comprehensive analysis of Jupiter’s products and business model

Introduction to Jupiter

Launched in September 2021 as a DEX aggregator on Solana, Jupiter aims to provide Solana users with a better trading experience by delivering liquidity from multiple sources instead of a single source. Although Jupiter started out as just an exchange engine, the protocol has grown into an important liquidity layer offering many different products to different users, and has become a key component of the Solana ecosystem.

Coin is about to be released, comprehensive analysis of Jupiter’s products and business model

Jupiters business model is driven by three core pillars:

  • Provide the best user experience

  • Maximize the potential of Solana’s technical capabilities

  • Improve Solana’s overall liquidity position

2023 has been a busy year for the Jupiter team, with the launch of a number of new core products including new DCA functionality, limit orders, and perpetual contract trading. There have also been multiple upgrades and optimizations within the core protocol, including the upgrade algorithm (Metis), bridge comparison tools, instant staking SOL > SOL swaps, and more, as well as more development tools including the release of the Jupiter terminal and two major API upgrades.

Jupiter 2023 volume review

Jupiter’s total trading volume reached $62,816,562,781, accounting for approximately 60% of all Solana DEX trading volume.

Jupiter’s monthly trading volume grew from $6,4925,8200.00 in January 2023 to $7,106,000,000.00 in December 2023, an increase of 994.48%. After Breakpoint announced $JUP, trading volume exceeded $16 billion in November, setting an all-time high for monthly trading volume. Whats even more impressive is that this volume increase (primarily in Q4) came primarily from organic trading activity.

In this report, well break down Jupiters product line and future plans, and explain the logic behind our investment approach.

AMMs and aggregators

Automated market makers have been a novel innovation in the digital asset space over the past few years. On traditional exchanges such as Coinbase or Binance, a third-party entity operates to provide liquidity so that traders have a counterparty, which is the other side of the transaction. These counterparties are called market makers because they create a market for traders to trade in, while charging a spread (fee) on each trade to remain profitable.

With the advent of AMMs, traders can deploy digital assets where math and code make markets instead of complex middlemen. By using AMMs, traders can enter and exit positions even in situations of extremely low liquidity. One disadvantage of low liquidity is that traders experience slippage, which is the difference between the expected value of a trade and the value of the trade that materializes. Traders may also lose value in their trades through the exploitation of information asymmetries in the public mempool, such as being jumped or flanked by sophisticated players deploying MEV bots.

On-chain aggregators emerged to mitigate the impact of low-liquidity trading, allowing traders to place orders that route liquidity from multiple sources instead of just one. Liquidity can be obtained from a variety of sources, including AMMs; although a few teams have built solutions that enable market makers to tap into off-chain liquidity (i.e. CEX positions) and help settle trades.

The main benefit of this is better pricing because:

  • Transfers within CEX do not incur any gas costs, while transfers on the chain have costs.

  • Transactions are not affected by MEV withdrawals

Overall, aggregators aim to provide a better user experience. Large content platforms like Meta or YouTube act as aggregators of content, allowing users to view videos and images from many different websites without leaving the interface. Google aggregates information related to your search query from many different sites across the Internet to provide the best matches in order of relevance. Similarly, Jupiter and other DEX aggregators source liquidity across multiple trading venues to provide traders with better trading prices.

SVM-based build

To better understand Jupiter as a protocol, its important to understand the role of the Solana Virtual Machine (SVM) and how it affects the protocol design choices developers must make.

A virtual machine can best be described as a single entity maintained by thousands of networked computers running validating clients for a specific chain (such as Ethereum) and is the environment in which all smart contracts and accounts actually exist. To this day, most DeFi and other on-chain activity occurs through the Ethereum Virtual Machine (EVM). However, while no longer in the spotlight, we believe SVM also has a strong architecture that will certainly continue to attract more developers looking to build consumer-facing applications optimized for speed and performance.

Smart contract code written in Rust, C, and C++ will be compiled into BPF bytecode by SVM. The Sealevel engine is a key component in enabling parallel processing on Solana; with state access lists integrated into Solana transactions (transactions contain details of the specific state to be accessed), this allows non-conflicting transactions to run concurrently, resulting in faster Overall performance.

And EVM is a"single thread"Running environment, meaning it can only process one contract at a time, SVM is multi-threaded and can process more transactions in less time. Each thread contains a queue of transactions waiting to be executed, and transactions are randomly assigned to the queue.

Coin is about to be released, comprehensive analysis of Jupiter’s products and business model

The emergence of L2 implementations such as Eclipse and Nitro that leverage SVM demonstrates the potential for further SVM adoption. Earlier this year, MakerDAOs Rune Christensen sparked a lot of debate on Twitter when he proposed his vision of using the Solana codebase to develop a MakerDAO application chain.

One of the most common complaints about Ethereum is that gas fees increase with user activity, resulting in an unpleasant user experience in most cases, especially during bull markets. No matter how high the gas fees are, a traders needs are very simple: get the best quote possible. Aggregators like 1inch aim to provide users with better prices by sourcing liquidity from multiple sources, rather than just one specific DEX. However, conducting transactions on Ethereum, such as drawing liquidity from multiple different pools, is an expensive task and may actually worsen the problem it is intended to solve. On Uniswap, which only draws liquidity from one place It may actually be more advantageous to trade on.

Solana, meanwhile, has the opposite situation, with gas costing less than a penny by default. The cost of obtaining liquidity from multiple sources is almost the same as obtaining it from one source, so on a chain like Solana, a DEX aggregator is more practical and beneficial than on an EVM chain. As the leading aggregator on Solana, we believe Jupiter is better positioned to achieve significant growth and adoption in the long term, while aggregators on EVM chains face higher costs and greater competition.

The same concept also applies to other use cases beyond simple A-for-B, such as providing users with structured dollar-cost averaging (DCA) or time-weighted average price (TWAP) products, which will be further elaborated below. The basic principle remains that low gas brings great flexibility to application developers on Solana, and Jupiter is a best practice example of this.

product description

Jupiter Swap

Coin is about to be released, comprehensive analysis of Jupiter’s products and business model

Like any other decentralized exchange, the most common use case on Jupiter is the simple exchange of Token A and Token B. Users can exchange their favorite assets at competitive prices. Slippage and priority fee settings are fully customizable, and general settings allow users to choose a direct liquidity route, use wSOL instead of SOL, and use versioned trading (using newer, better routing algorithms).

Developers can also leverage the Swap API to natively integrate Jupiters routing algorithms into their dApps. For example, Kamino Finance uses Jupiters Swap API to implement functions such as unilaterally depositing assets into their CLMM repository (Autoswap).

While we believe the continued growth and sustainable adoption of Jupiter and Solana DeFi will prompt the JUP DAO to vote to implement fees at some point in the future, Jupiter currently does not charge any additional swap protocols beyond the base gas fee and associated DEX fees cost. It will be interesting to see how this decision is affected given increased network activity driving higher demand and costs for block space, as well as a potential reorganization of the Solana fee market. Currently, the 1inch aggregator on Ethereum does not charge swap fees, while CowSwap recently proposed a fee switch that would charge swap fees, with the goal of achieving financial self-sufficiency while maintaining user incentives.

limit order

If a trader believes the price of an asset will change in the near future, a trader can place a limit order instead of buying the asset at the current market price. A limit order is an order with clear trade execution criteria or"intention"signature information, providing flexibility to traders, among other benefits such as better price settlement due to protection from MEV-induced slippage. This model benefits both retail traders and institutions, and Jupiter now provides a place for traders to place limit orders on Solana.

When a user places an order to buy 1 SOL worth of $WIF, the order is ultimately matched by a keeper, a trusted protocol participant responsible for monitoring the price and executing the order. The functionality of the keeper is similar to the solver on CoWSwap or the filler on UniswapX. After the order is executed, the specified assets will appear in the users wallet.

Jupiter’s limit order feature provides a wider selection of tokens, and token pairs can be traded as long as there is sufficient liquidity in the market. Additionally, users can specify an expiration time in their orders, at which time any outstanding orders will be canceled and refunded to the user’s wallet.

DCA

Dollar-cost averaging (DCA, also known as fixed-dollar investing) is a common investment strategy that involves splitting capital allocations into multiple trades rather than one; this is ideal for long-term investors who dont care about short-term volatility (e.g. Purchase $500 in SOL for 5 consecutive days). DCA is useful when accumulating assets in a bear market. The principle is to average ones entry prices to mitigate volatility and achieve greater returns over time and as market conditions change. Likewise, DCA can also help profit in a bull market, as opposed to selling ones position completely immediately, DCA can help spread out the sales to capture any additional upside that may occur during the unwinding period, rather than selling ones position completely immediately.

Traders can also execute a weighted average price strategy (TWAP) to buy or sell assets. Similar to DCA, TWAP is typically used for large orders that need to be split into smaller parts to prevent price impact (loss of funds) from a one-time purchase. Since the orders are executed over a period of time, they are similar to a DCA strategy, where x amount is purchased over a certain period of time.

Due to Solana’s high-throughput architecture, Jupiter is one of the few platforms that enables users to execute frequent time-limited strategies on-chain. DCA trading on low timeframes (e.g. daily) on Ethereum can result in hundreds of dollars in transaction fees, whereas on Solana it is just pennies. Even on L2, if a trader wants to execute 10 trades in 1 hour, the fees can add up quickly.

Perpetual contract

To further diversify its extensive offering, Jupiter also launched an LP-Traders perpetual contracts exchange earlier this year. Although still in beta, traders can trade SOL, ETH, and wBTC perpetual contracts with up to 100x leverage, while LPs can provide capital to earn fees.

Perpetual contracts are derivatives contracts similar to traditional futures, allowing traders to take larger positions with smaller capital allocations (leverage) in order to take advantage of future price fluctuations.

On Jupiter, traders can open long or short positions on SOL, ETH, and wBTC using virtually any supported Solana token as collateral. Long positions require a corresponding underlying (for example, a long SOL-USD position requires SOL collateral), while short positions require stablecoins as collateral. Traders can take on leverage by borrowing assets from liquidity pools - a SOL-USD position can be leveraged up to 2x by borrowing 1x SOL from the JLP pool.

Similar to the dynamics of the GLP pool on perpetual contracts exchange GMX, Jupiter Perps leverages the JLP pool, which includes SOL, ETH, WBTC, USDC, and USDT. Providing liquidity simply deposits any supported Solana tokens into the JLP pool in exchange for an equivalent value of $JLP tokens. The JLP pool receives 70% of the fees generated by the Jupiter perpetual contract, and the price of $JLP grows in tandem with the value of the underlying pool.

The JLP pool also benefits the larger Solana ecosystem because Jupiter Swap is natively integrated into the perpetual contract exchange, meaning not only can any token be used as JLP collateral, but Solana traders can add from the JLP pool Benefit from liquidity and get better trading prices.

Unlike the aforementioned features, Jupiter’s perpetual contracts exchange charges more fees for both traders and LPs. Traders pay the pool an hourly borrowing fee or funding rate, which is based on the hourly borrowing rate, position size, and token utilization, and can be expressed as:

Funding rate = (borrowed tokens/tokens in pool) * 0.01% * position size

LPs also need to pay a portion of their own fees for opening/closing positions and exchanging different assets within the JLP pool.

Coin is about to be released, comprehensive analysis of Jupiter’s products and business model

Regarding the JLP pool, it should also be noted that given the target ratio set for each token in the pool, any logic that moves the ratio of tokens away from the target will incur higher fees, while logic that moves the ratio toward the target will Generate fee discounts.

Decentralized perpetual contract exchanges, represented by GMX and dYdX, are still relatively underdeveloped compared to their CEX counterparts and have a lot of room for growth and adoption. Another example of a perpetual contract low-latency application that benefits from Solana’s fast execution and low transaction costs, although Jupiter will face challenges from established players in the Solana Perps space (such as Drift Protocol, 01 Exchange, Zeta Markets, Mango, etc.) compete.

Making the pie bigger: Jupiter’s vision

As the pie gets bigger, everyone gets more of it.

As an important part of the Solana ecosystem, Jupiter benefits by helping as many new users and developers as possible join the ecosystem. In addition to delivering value through a great product, Jupiter aims to empower its community and the broader Solana ecosystem through several new initiatives:

  • $JUP: The governance token of the new DAO (more on this below)

  • Jupiter Start: For ecosystems seeking sustainable growth, it’s important to strike a balance between being open to innovation while objectively criticizing poor app design, and being wary of teams that seek to exploit narratives and biases in the market.

Jupiter Start aims to be a platform between the Jupiter community and the wider Solana ecosystem to help review, debate, understand and highlight great new projects. This includes the Jupiter launchpad to help bootstrap new projects, pre-listing trading availability for new tokens, and Atlas, a new public seed funding program that allows the community to invest in early-stage projects, as well as various community-focused educational project initiatives .

If you know aboutJupiter StartInterested in more information, we recommend reading this blog post.

  • Jupiter Labs: This is a collective effort between the Jupiter team, community, and DAO to develop innovative products and tools for Solana DeFi. While these initiatives will start with Jupiter, they are ultimately designed to be independently launched and run protocols on Solana. Jupiter users will receive priority access to early product testing and therefore receive incentives, a portion of which will be allocated to the JUP DAO.

The first product that has come online is the Perpetual Contracts Exchange, which has gone live in the testing phase with a proposal for sUSD, a stablecoin backed by SOL (similar to LUSD:ETH) that uses leveraged LST to generate revenue.

More information about $JUP

Jupiter announced the $JUP token at a watershed moment for Solana, a strategic decision made after the protocol reached a number of key milestones, including a broad and active user base, several major platform upgrades and new products, and a series of ecosystem projects , and of course the belief in a future uptick in Solana activity.

The maximum supply of $JUP is 10 billion, and token distribution is evenly divided into 2 cold wallets - the team wallet and the community wallet. The team wallet will be used for distribution to the current team, treasury and providing liquidity, while the community wallet will be used for airdrops and various early contributors.

From day one, 15% - 17.5% of the tokens are in circulation, 10% - 7.5% are in hot wallets, and 75% are in cold wallets.

There will be a retroactive airdrop for Jupiter’s 955,000 early users (before the deadline is November 2, 2023), as well as an effort to attract new users and liquidity. The DAO will then vote on the token unlock data and the token will be initially locked with an unlock date set by the DAO. JUP holders will be able to vote on various key aspects of the Jupiter protocol and the role of the token, including the timing of initial liquidity provision, future emission arrangements, where the project will be showcased on Jupiter Start, and more.

“The initial value of JUP will become a symbol of Jupiter and DeFi 2.0, just like the value of UNI is a symbol of Uniswap DeFi 1.0.”

Fundamental Investment Catalysts

We have discussed the components of the Jupiter protocol and now we can explain the long-term investment opportunity we envision.

Bet on Solana

Solanas roadmap is ambitious and exciting, and we expect ecosystem activity to continue to grow in 2024, building on the momentum seen in Q4 2023. We believe in this for the following reasons:

  • More airdrops: Marginfi and a few other DeFi teams fired up the Solana ecosystem by launching points programs earlier in the summer of 2023. The JTO airdrop fueled the already growing momentum on Solana, creating a wealth effect that kept many jitoSOL holders happy but also left many dissatisfied looking for the next big opportunity. Starting with Jupiter ($JUP), others worth paying attention to include Kamino, Marginfi, Drift, Tensor, and more.

  • Firedancer: Jump Crypto’s highly anticipated validator client, dubbed “Solana 2.0” by Toly himself. Firedancer is expected to be a long-term benefit to Solanas performance and throughput as the network expands and evolves, and it marks a major milestone for Solana as it increases client diversity, thereby reducing single points of failure in the network risks of. Low-latency applications will become faster, which is an attractive selling point for both users and developers. With Firedancer likely to go live in 2024, we expect a lot of speculation and growing interest around this milestone.

  • DePin: This is a new area in cryptocurrencies that demonstrates how tokenized assets can be used to help decentralize real-world business models. Solana has successfully attracted many projects, including Helium and Hivemapper. Interest in DePin as an emerging field has in turn brought more positive attention to Solana as the network demonstrates its utility in serving more specific use cases.

  • Payments: Solana Pay is now integrated with Shopify, meaning merchants can accept Solana payments, meaning the average JTO airdrop recipient can purchase over 2,000 cups of coffee with their earnings. While there are still hurdles to overcome in actually getting shoppers to pay in Solana Pay, partnerships with the largest e-commerce platforms are a great start. Additionally, earlier this year, Visa, one of the world’s largest payment networks, announced plans to leverage Solana for a stablecoin settlement pilot, an experiment to test the capabilities of blockchain settlement rails to build new products for commerce and currency flows. Solanas high throughput, fast finality, low transaction costs, and node availability are all positives for Visa, just as Visas brand can bring a lot of attention to Solana. If successful, we believe the stablecoin settlement pilot will mark a major milestone in the development of real-world crypto use cases, and Solana will benefit as the de facto network to enable this.

The last one worth mentioning is the Saga phone. While Solanas phone may not be a huge success in its first year, the push for mobile-friendly crypto environments and apps could be an exciting development in the long term, given the impact mobile integration has had on social media and payment apps. . The Solana phone recently airdropped BONK tokens to buyers, and the team recently announced version 2.0 of the phone, which includes a cheaper price (you can buy it for $450) and a recommended leaderboard to drive more user engagement.

Solanas Challenge

While we remain bullish on Solanas long-term growth, we expect the Solana core team and developer community to address several key issues in both the short and long term, and we will be watching closely:

  • Fee Market: Although Solana now introduces priority fees, there is no native mechanism to determine a market priority fee to help effectively limit spammers (i.e. EIP-1559). With the demand for block space now greatly increased on Solana, more and more users are experiencing transaction failures, further demonstrating the need to upgrade the networks current fee market structure. The proposed solution involves dynamic account fees and multi-dimensional EIP-1559, where fees increase exponentially for every account exposed to the exact same hotspot.

  • EVM competition: Although we believe that in the long term, SVM vs. EVM will not be a zero-sum game, and different networks will focus on their respective categories, today Solana is still competing with the EVM space for market share and users, which is a need to bridge huge gap (a gap between US$140 million and US$3 billion).

  • EIP-4844 aims to significantly reduce the cost of L2 (80-90%) and make it easier to use/deploy, which can solidify the leadership position among Arbitrum, Optimism and Base. Similarly, Celestia offers more flexibility and lower costs for L2 developers, which may draw talent and users away from Solana.

  • The re-hypothecation narrative is likely to be one of the biggest catalysts for Ethereum and could also lead to massive capital inflows. Security risks aside, investors seeking native returns on native L1 assets will seek opportunities to earn higher returns, which provides Ethereum stakers with the opportunity to stake again.

  • Parallelized L1: The popularity of parallelized L1 chains (MoveVM, Sei, Monad) continues to grow, they optimize for Solana-like speed and performance, but are still young and immature. Monad was built by several team members with high-frequency trading backgrounds to bring Solana-like performance to EVM environments, theoretically combining the best of both worlds with transaction speeds of up to 10 , 000 transactions/second. However, these chains not only face the difficulty of overcoming Solana itself, they also have to compete with the Neon EVM, which enables Solana compatibility through the Ethereum native environment. Aave recently posted a proposal on its governance forum to discuss whether to deploy its V3 protocol on the Neon mainnet. With all this in mind, we believe Solanas resilience is its greatest strength and long-term catalyst, having demonstrated the ability to overcome macro challenges (like FTXs collapse) or technical shortcomings (like network outages).

Betting on Solana = Betting on Jupiter

Jupiters green paper reads: Our vision for the future is closely tied to the growth and prosperity of the Solana ecosystem. We are driven by our belief that a thriving Solana ecosystem will deliver collective benefits to all stakeholders. In short In other words, when the pie gets bigger, everyone gets more of it.”

We believe Jupiter’s key role in the Solana DeFi space makes it a viable bet for both near-term and long-term adoption of the network. The idea is very simple. More users on Solana = more users on Jupiter. Solana’s initial boom lasted about a year (2021), during which time protocols like Saber and Serum dominated the DEX space. Jupiter gained traction soon after its launch, with the goal of leveraging the DEX’s on-chain liquidity rather than stealing market share to provide a better user experience and better pricing. However, it was not until the decline of the once dominant Solana DEX Serum that Jupiter became the market leader it is today.

In 2023, Jupiter has consistently accounted for more than 60% of DEX trading volume on Solana.

Analyzing Jupiter’s business model

Initially, Jupiters core product was just an exchange engine optimized for better pricing at no additional cost to traders. As the project grew and transaction volume and traders continued to grow, the team launched a number of new products that now serve as an organic revenue stream for the protocol through fees. We believe that the JUP DAO will naturally seek to ensure that $JUP holders receive a percentage of these fees and future opportunities with Jupiter Start and Jupiter Labs.

Coin is about to be released, comprehensive analysis of Jupiter’s products and business model

  • Limit order: 30 BPS

  • DCA: 10 BPS

  • This is a unique offering and I think Jupiter could take advantage of it further by raising the fee (around 20 BPS).

  • Perpetual contract

  • Opening/closing a position: 10 BPS

  • Exchange fee: 0 - 200 BPS (varies based on pool weight)

  • Borrowing interest rate = 1 BPS/hour * token utilization %

  • The JLP pool receives 70% of the fees generated by Jupiter perps

  • external protocol

  • If a protocol integrates Jupiters architecture into their own software and then charges their own fees, Jupiter will ensure they receive a portion of the fees as well.

What if

  • Jupiter Start: We think it might be smart to leverage the Jupiter Start programs (i.e. Launchpad and Atlas) to create additional revenue streams for Jupiter and $JUP holders.

  • Launchpad: Establish transaction flows for projects incubated or operated by Jupiter Launchpad, with a portion of project revenue going to JUP DAO.

  • Atlas: Create an efficient model that collects revenue from the realized proceeds of public seed funding programs and distributes it to participating holders and investors.

  • Jupiter Labs - As perpetual contracts have proven, Jupiter Labs supports the development of protocols that can generate additional revenue for Jupiter.

  • Another proposal for sUSD is in the works

  • An interesting question to consider here is how these initiatives might one day be launched and operated independently, as outlined in the Jupiter documentation, and how doing so would impact specific revenue streams.

  • interchange fees

  • Jupiters switching engine has always been the core product that Solana users know and love. However, as fee dynamics on Solana continue to evolve, transactions will undoubtedly become more expensive as more smart contracts compete for less block space. JJupiter has positioned itself to allow traders to pay a priority fee for faster execution, and if this feature continues to be adopted from this point forward, it would be reasonable to charge an additional fee for the services Jupiter provides (there is no native way to calculate basic Priority Fees).

Jupiters competition

Overall, we believe Jupiter is uniquely positioned in its role as an aggregator as it does not currently directly compete with any one transaction protocol on Solana. Nonetheless, as the Solana DEX ecosystem continues to evolve and demand for low-latency trading applications grows, Jupiter will naturally be challenged by projects that keep up with the latest innovations and developments. Ultimately, traders want better settlements and will take action when this happens.

Additionally, Jupiter faces greater competition in its other products (such as perpetual contracts trading), and there are often incentives for teams to recreate the DCA product or something similar.

  • The DEX landscape on Solana is constantly evolving and becoming more competitive. Outside of Solana, competition is even fiercer.

  • Jupiters competitive advantage is in providing users with price settlement; if a protocol comes along to offer better pricing, users are more likely to go there.

  • Swapping remains the primary use case; swap engine performance is critical.

Niche products (Perps, Limit Orders, DCA) have stronger competition and competitors can offer lower fees.

Suggestions for Jupiter

  • More transparency around fees and revenue, as well as a dashboard of product performance data would be helpful to investors.

  • JUP holders should be the primary beneficiaries of Jupiter’s revenue streams (limit orders, DCA, Perps, Jupiter Start + Labs).

  • Consider routing models that leverage off-chain liquidity (i.e. CEX LP inventory) as well as on-chain liquidity to provide users with better pricing. Similar to 1inch Fusion, Matcha by 0x, CoWSwap, etc.

  • This will apply to exchanges, limit orders and DCA.

  • Ensures $JUP holders receive a portion of the revenue generated by Jupiter Labs products and services.

  • Ensuring that any team Jupiter Start either incubates through a startup platform or is backed by public seed funding allocates a portion to $JUP holders when fees are implemented on their protocol.

  • Ensure that large-scale airdrop distribution does not dilute the quality of participants representing the JUP DAO.

future outlook

Given its unique position in the ecosystem, we believe Jupiter is a viable bet for both near-term and long-term adoption of Solana.

As network activity on Solana continues to increase, we expect Jupiter to capture significant liquidity through its established ecosystem presence, diverse product suite, and sustainable revenue model, which should benefit $JUP holders long.

As Larry Fink starts talking about the tokenization of financial assets, and L1 blockchains like Solana continue to seek product market fit and explore new utilities and innovations, imagine that Jupiter can accommodate all kinds of new ones over time. Asset classes aren’t too far off either.

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