Jupiter Airdrop: The Good, the Bad, and the Ugly

About

Jupiter is a decentralized exchange (DEX) and liquidity aggregator on Solana processing $3.7 billion in transaction volume in November 2023 alone. They recently launched their governance token JUP with a massive airdrop of 1.35 billion $JUP tokens to nearly one million wallets. The airdrop, which took place on January 31, 2024, was one of the biggest ever on the Solana blockchain, with an estimated value of over $700 million at the time of writing.

JUP is the governance token of Jupiter, which should allow community members to approve, sanction, and vote on aspects of the platform for future developments. JUP has a total supply of 10 billion tokens, of which 40% are allocated for airdrops, 40% for the team and investors, 10% for the treasury, and 10% for the foundation.

The main purpose of launching JUP was to decentralize the governance and ownership of Jupiter and to reward its loyal users and contributors. According to Meow, the pseudonymous founder of Jupiter, the airdrop was designed to be as fair and inclusive as possible, based on various criteria such as interaction, volume, and community contribution.

However, the airdrop also faced some challenges and criticisms and was a talking point of the community for quite a while. In this article, we will examine the good, the bad and the ugly sides of the $JUP airdrop.

The Good

The hype leading up to the airdrop was one of the biggest in recent times, even though some people might argue that they became bored with the multiple long paragraphs in tweets posted by the founder. To ensure that the launch of $JUP would go smoothly, they first tested it with the launch of mockJUP, which was only supposed to be a test token but ended up becoming a shitcoin of its own after people started trading it, achieving an ATH market cap of over $200 million. They also tested with the airdrop of the $WEN memecoin to over 1 million wallets, which also reached an ATH market cap of over $130 million.

The airdrop was met with high demand and excitement, as evidenced by the surge in Solana network activity and JUP price. According to Solana Beach, a Solana network explorer, the number of transactions per second (TPS) peaked at 1,800 and the average TPS was 1,200 during the first hour of the airdrop, compared to the normal range of 300-600 TPS. The JUP token also soared in value, from an initial price of $0.41 to a high of $0.95 in some exchanges, giving it a fully diluted valuation of over $9 billion.

Despite the Solana network being congested and early users facing issues claiming the airdrop—necessitating an increase in network fees to send transactions—it held up quite well. This demonstrated the scalability and robustness of the Solana blockchain. The airdrop has not only brought liquidity to the Solana chain but also paved the way for other projects to distribute free tokens to ecosystem users.

The Bad

There were concerns about the fairness of token allocation, the mechanism of the airdrop allocation, and other issues, but these were largely overshadowed by the hype. The significant issue arose when people realized the Jupiter team was selling tokens on the open market, raising funds for the team based on a $7 billion valuation, leading some to label it a "rug pull" due to liquidity removal, a common scam tactic among shitcoin founders.

The Jupiter team implemented "moon protection" for the JUP token launch, capping the price at $0.70 until securing $100 million. The liquidity pool ranged from $0.4 to $0.7, with outcomes varying based on the token's value within this range.

Later, the team addressed concerns by deciding to only remove the JUP side of the pool, allowing the USDC side to remain and planning its gradual removal over months.

The Ugly

Source: TradingView

This $JUP chart could be described as “the ugly” as it has been pretty much down only since the launch. In true crypto fashion, the once greatly valued tech has seemingly become useless with token performing poorly.

Users are speculating about how $JLP, another token by Jupiter, might offer a better value proposition since holders share 70% of the revenue from the Jupiter’s perp exchange product. Also, it's the fourth token launched by the Jupiter team, if you're keeping count.

With all that being said and done, it will be interesting to see how the Jupiter team and DAO will handle the situation from here on. Could it be a similar situation to where everyone was stockpiling on Solana, and it experienced a hated rally? Jupiter remains the most used Dapp in the ecosystem and likely will continue to be so.