Proposal: Enhance certainty for JUP holders and community via a token supply reduction

[meow]

Background Reading:

• Initial Announcement: Meow’s Initial Idea
• Community Audit by Degen Mom & Soju
• Ethos of JUP: PPP and CAT
• Lochie2001’s Pros & Cons of the Vote

Building in Certainty and Alignment For Token Holders

This is the first of the series of three JUP-related votes to provide more certainty, alignment and transparency (CAT) for all JUP holders and the community.

The initial JUP tokenomics was formed late last year, with modifications made over the initial announcement essay as well during the main launch, taking in feedback from the community.

Since then, besides gaining a much better understanding of the likely requirements and usage of the reserves, we have also heard a lot of feedback regarding the uncertainty brought on by a high FDV and potential future emissions, particularly the next few Jupuaries.

To address these concerns, we are proposing both a significant reduction in token supply, as well as letting the community take ownership over the future community emissions.

These will not only cut away the fat in the tokenomics, but also create a major push for everyone to understand the current and proposed token breakdowns. Along with having the voter vote on major future Jupuaries, should greatly address the uncertainties and allow the community to be fully aligned with the next stage of Jupiter.

Token Supply Reduction Vote

For the first vote, we propose a 30% reduction in token supply, from 10B to 7B.

50/50

Following the 50/50 principle, which the team manages 50% and the other 50% is earmarked for the community, 1.5B will be burnt from both portions.

Team Managed Portion

As per the community audit, this is the current breakdown in the portion managed by the team:

Following the cut, this will be the breakdown:

The proposed cuts from the team-managed portion come from:

• Team voluntarily reducing 30% from their assigned allocation
• Major reductions in LP Needs
• Smaller reductions for Strategic Reserve and Mercurial Stakeholders

Community Portion

As per the community audit, this is the current breakdown in the portion managed by the community:

Following the cut, this will be the breakdown:

The proposed cuts from the community portion come from:

• 30% reduction in Jupuary
• Reductions in Community needs and Community reserves

Summary

This is the first of the series of three JUP-related votes to help build more certainty and alignment among the JUP community and the holder base.

We aim to address concerns around high FDV, provide a best-in-crypto boomer level of transparency around token distribution and allow the voters to decide the major parts of the potential emissions.

For this first vote, we aim to reduce the token supply from 10B to 7B. The reductions will come from:

• Team will voluntarily cut 30% from their assigned allocation
• Corresponding 30% reduction in Jupuary emissions
• The rest of the reductions will come from previously assigned allocations such as from LP and strategic reserves

With the audit, ethos essay and this reduction in supply, we hope the community will emerge from this vote with a much enhanced understanding of the collective plans for JUP and be able to execute towards the meta as one cohesive unit.

[0xPit]

@meow

provide a best-in-crypto boomer level of transparency

Lmao love the way you worded this. I’m all for this. Complete trust in the team.

[TanSnowMan]

This sounds pretty solid to me. But to be real, I would vote for anything Meow would vote for. I would delegate all of my tokens to him as my vote representative. What’s your vote, Meow? (I know you probably wouldn’t say)

Which, speaking of, that could be a really cool function for Jup. I think a lot of folks would love to delegate their votes to a person or entity they align with. Beyond a dex, Jupiter is proving to be one of the most progressive and seamless governance platforms ever created. A few tweaks and upgrades, and there is a world of possibility.

[ycsama]

proud of the team. LFG LFG

[Nihonzak]

Im all for 30% supply reduction in all, but I think that cutting into the season distribution treasury may not be such a good idea, considering it will also hurt jup used for strategic and community needs. But I do actually seriously see the upside in doing the 30% cut as well, although it does hurt the team’s salary. Im genuinely torn, less jup for all just means less supply to be injected into circulation, bullish asf. people may sit here and cry about getting potentially less jup when S2 comes around, but I actually see this as a “w”, considering the first drop already being plenty generous and the recent Sanctum drop being a little bit below everyone’s expectations. Jup needs to let everyone know that their token is rare and valuable and make it harder to get! this supply idea is growing on me!

[Nihonzak]

Would anyone have genuine arguments as to why the supply cut would actually be harmful or a bad idea? Im curious to know if anyone can enlighten me.

[ahmads]

Voted yes. Love the teams

[c2yptic]

Appreciate the detailed explanations and breakdowns of the numbers which makes this proposal very easy to understand … Thanks @meow !

This is a no-brainer to me, it will both improve the DAO and the Jupiverse, so I voted YES!

[BTC]

Great proposal, are we getting ASR after this season?

[BlueZenith]

Future ASR details will be the subject of an upcoming vote, I believe.

[Didf]

I just missed the cutoff for the first jupuary drop, so all my stake before the recent asr was bought. I imagine this proposal will pass and that’s for the best, but I can’t help but be bummed my first jupuary will be diminished

[BlueZenith]

In looking at this chart, you can see a little more clearly exactly from where the cuts are coming.

Though the percentages are the same (30%), the team is giving up 600M tokens while the community is giving up 900M from subsequent Jupuaries.

When it comes to the strategic reserves, the team is cutting 217.3M tokens (14.49%) while the community is cutting 200M tokens (40%).

On the team side, the balance of the reduction comes from the liquidity buckets (582.7M) and Mercurial Stakeholders (100M).

On the community side, the Community Needs bucket (400M) is being completely eliminated. Since the original DAO funding (100M) came from this allocation, it begs the question of how the DAO will be topped up at the beginning of next year. Will it come from the reduced Community Reserves?

It also remains to be seen how future ASR beyond Q3 2024 will be funded. If that is also to come from the Community Reserves, that doesn’t leave much runway unless the rewards are significantly reduced. One minor adjustment could see the Subsequent Jupuaries reduced to 2B for two more rounds (2025 & 2026) instead of three and 100M added back to the Community Reserves for future ASR and DAO initiatives.

As proposed, the community side will lose 67% of reserves if it passes.

[Hayden_S]

I vote YES !!

[humphreydefirst]

I’d have voted for 30% (70% team, 30% community), but…

[schoko]

Solid! You got balls meow and I like it! xd You are my hero so majority of what you say and vote for I am too. It’s yes for me!

[noccommander]

Problem with Proposal

The first issue I have with supply reduction proposal is that it demands nothing from the team and everything from us. Contrary what Meow is claiming. Read down

The second issue is that JUP does not have a supply problem. Problem never manifested and is not affecting nothing now or in past.

We actually have:

Demand Problem

JUP’s real issue is demand. The community tends to attract passive investors who believe in zero risk investing. These investors prefer to wait for rewards rather than buy more JUP, creating a supply-demand imbalance. This is why SOL outperforms JUP.

Macromarket Conditions

Meow recently attributed SOL outperforming JUP to macromarket conditions. This is misleading. The macro market exposed JUP’s demand problem. If the market were consistently rising, this issue wouldn’t have been uncovered. So, the correct statement is that macromarket conditions revealed the demand problem not caused it.

Potential Solutions

We could solve the demand problem by providing more utility for JUP on the Jup.ag platform beyond voting. For example, we could offer revenue sharing or lower fees on margin trading for stakers.

Misconceptions About Value of Crypto when numbers go crazy ( Hundreds of Millions of JUP )

To address the first problem, we need to correct misconceptions about wealth, crypto, the value of JUP in the treasury. The average JUP holder has a few hundred to 1,000 JUP in their wallet, which they can sell at today’s price. This means they can convert 100% of their JUP into USD. When you give up 30% you actually give up 30%.

Value of JUP Team’s Holdings can not be sold at current price

The Jup.AG team owns 50% of JUP but can realistically sell only about 10% without driving the price down 500% down at least. (We’ve observed that jeeting of 10 million JUP like some private investors did, suppresses the price by approximately 10 cents. If the team started selling their holdings, the price would plummet after 10% of team holdings were sold. There’s an argument that if the price drops significantly, people will buy. However, the JUP community is not inclined to buy, especially community leaders are well rewarded through working groups with free JUP, they will not support initiatives for giving JUP additional utility to create more demand.

Conclusion

The JUP team can only sell maybe 10% of what they have without making JUP almost worthless. For them, giving up 30% of rewards is insignificant because they couldn’t sell that amount anyway. The team already has many times more JUP than they can sell without significantly lowering the price. So, parting with 30% of rewards means parting with 30% of nothing they could ever sell. They don’t need these rewards and have to much of JUP to sell anyway without running price super low.

So only party that is losing is YOU.

I don’t actually have problem with proposal as such as it is great marketing trick that actually boosted a price, but I don’t like not addressing obvious Demand problem cult like preaching about things ( all money is meme, PVP, PPP ) all stuff that economists and game theorists all figured out decades ago, where in fact he is experimenting.

[degenking]

LFG. Normally I do not do this but converting some of my other sol defi tokens to JUP, and it is not short term.

[georgegr]

A very well explanatory post, regardless of whether someone agrees with him or not . WHY ILL VOTE NO - The 30% reduction vote