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In December 2022, the Solana staking liquidity and MEV capturing protocol Jito announced the issuance of the JTO token. The token will be used to incentivize the community and ecosystem development, with 10% of the allocation reserved for an upcoming airdrop. (This article is not investment advice.)
What is Jito?
Jito, established in 2022, created the third-party client Jito-Solana, offering users staking liquidity services for SOL and allowing stakers to use JitoSOL for various fund operations, similar to Ethereum's Lido protocol.
However, Jito goes beyond that; users, in addition to staking rewards, can earn MEV rewards. With the successful creation of Solana's first MEV capture mechanism, similar to Flashbots' public MEV marketplace, users staking SOL can earn a portion of the MEV rewards obtained by the node. Jito can be thought of as a combination of Lido and Flashbots, providing users with overall higher returns than other competitors and attracting users and nodes to join the ecosystem. Currently, over 6.8 million SOL are staked on the Jito client, and it has 41% of the staked nodes in the Solana network.
Due to the marketization of MEV, Solana has seen a significant reduction in invalid spam transactions (used by MEV searchers to front-run trades in the past), making the network more efficient.
As Jito's influence in the Solana ecosystem stabilizes, the team believes it's time to transition the network's governance to the community and contributors formally. This involves issuing the governance token JTO and establishing a DAO and foundation entity.
Jito Token Issuance
Amid the recent attention to the Solana ecosystem, with many popular projects like Jupiter issuing tokens, Jito is also joining the trend. According to the official announcement, Jito will issue the governance token JTO to gradually transition the protocol to a decentralized governance state.
JTO Distribution Mechanism
The total supply of JTO is 1 billion, to be issued on the Solana mainnet. The contract address is not public, and the initial distribution is as follows:
- Community growth (34.3%): Includes an immediate 10% airdrop share, with the rest determined based on community voting for future plans.
- Ecosystem development (25%): Funding for core contributors to the community, mainly targeting developers, donated to the Jito foundation.
- Development team (24.5%): Jito team's share with a three-year unlocking period.
- Investors (16.2%): Early investors with a three-year unlocking period.
The airdrop includes users who have used JitoSOL in the past, Solana validators running the Jito-Solana MEV client, and MEV searchers using the Jito Network. The snapshot was taken on November 25, 2023, and the airdrop details will be announced.
The team and investor token unlock dates will start in 2025, resulting in an overall token circulation as depicted in the graph.
Jito Foundation
Jito will establish a foundation with the aim of enhancing the staking economy through JitoSOL and related products, improving the Solana network, and helping JTO token holders seamlessly transition decision-making from on-chain DAO to off-chain infrastructure and legal entities.
The foundation's allocation of token usage is crucial. The Jito Foundation will receive 59.3% of the total JTO token supply, with 10% allocated for airdrops, 24.3% directly controlled by token holders through Realms, and the remaining 25% donated to the foundation to support ecosystem development.
JTO Token Value
As the governance token, JTO's value comes from its decision-making power in the protocol. It primarily serves three purposes:
1. Governance decides on transaction fees for the JitoSOL staking pool.
2. Governance controls StakeNet parameter updates.
3. Governance decides on the DAO treasury.
Solana Ecosystem Maturity
Jito not only addresses Solana's difficulty in establishing MEV but also solves the downtime caused by spam transactions. Since February of this year, Solana has had no significant downtime records. Thus, Jito has received enthusiastic participation and discussion in the market. The token issuance is inevitable.
Besides Jito, other third-party clients like Firedancer and Sig are under development, each with its own features. Jito's success has driven the development and expectations of the Solana ecosystem, and third-party clients symbolize the maturity of the ecosystem. It is expected that the Solana ecosystem will continue to grow vigorously in the near future. |
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Post time 4-12-2023 13:00:37