JUPITER ($JUP) Project Research Report

Project name: Jupiter

Network: Solana

Project Type: Decentralized Exchange Platform (DEX)

Token symbol: $JUP

Cryptocurrency Ranking: 98th

Total market value: $718.6 million

Fully diluted market capitalization (FDV): $5.29 billion

Circulation supply: 1.35 billion coins (accounting for 13.50% of the total supply)

Total supply: 10 billion pieces

Opening overview

On January 15, 2024, a report released by the Binance research team showed that the encryption market experienced a significant recovery in 2023, with the total market value increasing by 109%. At the same time, the decentralized finance (DeFi) sector has also achieved strong growth, with its total value locked (TVL) increasing by 38.9% year-on-year to $53.4 billion.

With the launch of the JUP token on January 31st and the overall resurgence of the DeFi space, Jupiter occupies a prominent position in the DeFi space on the Solana blockchain.

Project Overview

Project Jupiter was initially launched as an experimental project by a team dedicated to enhancing the functionality of stablecoins in the Solana ecosystem. They successfully launched the first cross-protocol liquidity exchange feature on Solana by integrating with Mercurial and Serum. This initial success inspired the team, and they decided to officially launch Jupiter as an independent project in November 2021.

Simply put, DEX aggregators like Jupiter aim to simplify the trading process. It finds the best exchange rate for users by aggregating liquidity from multiple decentralized exchanges. This model is different from traditional DEXs that rely on a single source of liquidity. By horizontally comparing quotes from multiple platforms, DEX aggregators can minimize slippage and transaction fees, making the transaction process more efficient and user-friendly. This innovation effectively solves the problem of fragmentation in the DeFi market and ensures that users can operate under optimal trading conditions.

Jupiter's mission is to build the most comprehensive and reliable switching infrastructure on Solana to meet the needs of individual users and projects. To achieve this goal, Jupiter has launched a number of innovative trading features:

• Timed Cost Averaging: Automate investing through this feature, allowing users to spread out their investment time to mitigate the impact of market fluctuations.

• Cross-chain bridge service: Provides bridging services for asset transfer between Solana and other blockchains, expanding users’ access to the ecosystem.

Perpetual contract trading: Supports perpetual contract trading, allowing users to speculate on asset price trends and use leverage without expiration restrictions.

These features reflect Jupiter’s commitment to optimizing a smooth, advanced trading experience on the Solana blockchain.

Jupiter LFG Launchpad

Jupiter’s LFG Launchpad Beta takes an innovative approach to supporting new projects, emphasizing a model with community-driven and transparency at its core. The platform is distinguished from the complexity of traditional launch pads by adopting an open market and community participation approach, abandoning complex incentive structures and isolated price discovery mechanisms.

The core of LFG Launchpad lies in its massive community support, customizable Launchpad to prevent bots, user-friendly design tools for liquidity management, and comprehensive trading functionality. This setup ensures that users will find fair prices and instant liquidity, while providing enterprise-level support for the technology.

LFG Launchpad’s innovative mechanisms, including a fair airdrop system and a Dynamic Liquidity Market Maker (DLMM), provide a stable market entry point for new tokens. By letting the community DAO vote to participate in project selection, it ensures that the launched projects receive strong support and a clear path to success.

Token economic model

While Jupiter’s JUP token plays a central role in facilitating ecosystem governance, granting holders voting rights on important matters that determine the direction of the platform, according to multiple statements by its founder Meow, JUP’s value is not primarily driven by It's driven by practicality. Meow recently stated in a Reddit post:

“I think the idea that token utility drives value is a myth that’s been created to explain the value of things, or is put forward by project founders who are desperate to try to explain why their tokens have value. "I believe most people are not really focused on practicality, but on value." Meow discussed the concept further on the Lightspeed podcast.

“We definitely hope to enable JUP holders to utilize their JUP more broadly over time, including participating in key ecosystem projects, etc., but this should not be confused with the value of JUP,” he added.

Token supply and distribution

While Jupiter’s JUP token plays a central role in facilitating ecosystem governance, granting holders voting rights on important matters that determine the direction of the platform, according to multiple statements by its founder Meow, JUP’s value is not primarily driven by It's driven by practicality. Meow recently stated in a Reddit post:

“I think the idea that token utility drives value is a myth that’s been created to explain the value of things, or is put forward by project founders who are desperate to try to explain why their tokens have value. "I believe most people are not really focused on practicality, but on value." Meow discussed the concept further on the Lightspeed podcast.

“We definitely hope to enable JUP holders to utilize their JUP more broadly over time, including participating in key ecosystem projects, etc., but this should not be confused with the value of JUP,” he added.

Token supply and distribution

The total supply of JUP tokens is set at 10 billion.

Team allocation (50%)

• Team Members (20%): 2 billion JUP tokens are reserved for existing team members, gradually unlocking starting two years after the Token Generation Event (TGE), to emphasize long-term commitment to the team.

• Strategic Reserve (20%): An additional 2 billion tokens are allocated to future team members, strategic investors and stakeholders in historical initiatives, stored in a secure team cold multi-signature wallet that requires majority approval Execute the transaction. The tokens are locked for a minimum of one year, with at least six months’ notice before any liquidity events.

• Liquidity Provision (10%): 1 billion tokens are dedicated to providing liquidity, managed through the team hot wallet multi-signature wallet.

  

  Growth potential outlook

  The rapid expansion of the DeFi market, coupled with Solana’s technological advancement, provides a favorable environment for Jupiter to seize a larger market share.

  What is particularly noteworthy is that Solana surpassed Ethereum in December 2023 and became the leader in weekly DEX trading volume. This achievement cannot be ignored. As the first on-chain exchange aggregator on Solana, Jupiter is in a very good position not only because big-name projects like Render, Helium, and Hivemapper have migrated to it, but also because its DEX trading volume has surpassed Ethereum (Solana hit $10 billion , compared with $8.8 billion for Ethereum), showing strong market momentum.

  

  As one of the most popular DeFi trading platforms among independent wallet users across all major blockchains, especially on the Solana network, Jupiter guides 80% of transaction volume and accounts for 65% of all transaction volume, establishing itself within the ecosystem its core position.

  
  

  It’s reasonable to infer that Jupiter’s success is closely tied to Solana’s widespread adoption. According to Messari’s latest Solana report, several key growth indicators are highlighted:

  • Solana's virtual machine (SVM) and its technology stack are gaining attention and adoption from external developers.

  • Minting volume of compressed NFTs (cNFTs) increased 316% quarter-over-quarter.

  • DeFi’s total value locked (TVL) rose to $368 million.

  • Despite the underlying concerns, market capitalization increased 17% to $8.4 billion.

  For more Solana metrics, please refer to the full Messari report.

  In addition, the Firedancer client developed by Jump Crypto is studying how to achieve up to one million transactions per second, which will greatly improve Solana’s scalability and performance.

  
  

  

  These developments, coupled with the traction the platform's technology stack is gaining among new users, suggest that under effective management, Jupiter is poised to achieve significant growth over the next few years, leveraging Solana's technological advancements and increased market influence.

  Competitive product analysis

  Jupiter is not the only successful trading platform within the Solana ecosystem; Orca and Raydium emerged as its main competitors, both of which are decentralized exchanges (DEX) built on Solana.

  Raydium:

  • Market capitalization: $260.11 million

  • Ranking: 188th

  • Fully diluted valuation (FDV): $564.27 million

  • Circulation supply: 255.76 million (46.08% of total supply)

  • Total supply and maximum supply: 555 million

  Orca:

  • Market capitalization: $203 million

  • Rank: 227th

  • Fully diluted valuation (FDV): $411.1 million

  • Circulation supply: 49.38 million (49.38% of total supply)

  • Total supply and maximum supply: 100 million

  Orca has established a reputation in the Solana DeFi space through its user-friendly interface and the introduction of “Whirlpools”. These innovative liquidity pools provide centralized liquidity, resulting in higher yields for liquidity providers and better pricing and minimized slippage for traders.

  In contrast, Raydium serves as both an automated market maker (AMM) and Serum’s liquidity provider, facilitating the integration of AMM liquidity with Serum’s centralized order book. This integration expands trading possibilities and improves liquidity on the platform.

  Orca mainly focuses on simplifying the DeFi experience to make it more accessible and friendly to ordinary users. Raydium, on the other hand, targets advanced traders and liquidity providers, providing a sophisticated set of tools and features to meet their needs.

  As of now, Orca has a larger market share of Solana DEX trading volume at 48.6%, compared to Raydium’s 28.6% market share. However, Raydium leads in total transaction volume with $66.6 billion, while Orca generated $36.4 billion. It is worth noting that Orca, as a newer project, has shown impressive growth, generating $852 million in the past 30 days, compared to Raydium which only generated $820 million.

  
  

  

  
  

  

Jupiter differentiates itself from other platforms by integrating liquidity from leading projects such as Orca, Raydium and Drift. This strategy allows Jupiter to provide optimized trading strategies to ensure users get the best trading rates. In addition, Jupiter provides a wide range of trading options and financial tools through an easy-to-use platform, perhaps more convenient and efficient than Orca or Raydium.

Outside of the Solana network, Uniswap, as the largest DEX, is known for its high trading volume and large user community. Recently, Jupiter attracted attention with its daily trading volume surpassing Uniswap v2 and v3, adding $10 million.

Despite Jupiter’s performance, Uniswap remains the leading DEX in the Ethereum network and DeFi, known for its rich liquidity and broad user base. Hayden Adams, founder of Uniswap, emphasized that the platform’s daily trading volume of $700 million proves its significant influence. He believes Jupiter’s recent volume growth is more a reflection of short-term trading trends than a sign of lasting value.

Currently, Jupiter and Uniswap have similar market values, with fully diluted valuations (FDV) between US$5 billion and US$6 billion.

Bullish fundamentals

• The DeFi market share will increase from 4.1% to 4.5% in 2023. This, combined with the recovery in DeFi token prices, will create favorable conditions for Jupiter to further expand its trading volume in 2024.

• Jupiter’s trading volume on CoinGecko is second only to Uniswap and far surpasses PancakeSwap, solidifying its position as the second largest decentralized exchange (DEX).

• Solana’s reputation as the “Ethereum killer” blockchain and its prominent role in the DeFi space reinforce its growth potential given Jupiter’s status as the premier DEX aggregator.

• LFG Launchpad demonstrates Jupiter's commitment to innovation. By enhancing the functionality of the launch pad and introducing new concepts, it attracts diverse projects and community participation, further boosting transaction volume and participation.

• Jupiter founder Meow has relied on his rich experience in the DeFi field, having provided consulting for major projects such as Kyber and Blockfolio, and co-founded wBTC, demonstrating the Jupiter team's strong and diversified cooperation network with a wide range of projects.

Bearish fundamental factors

• The functionality and reputation of the Solana blockchain on which Jupiter relies is critical. Frequent network outages, including a major outage today and a nearly 20-hour outage in February 2023, have called into question its claims as a robust platform, impacting Jupiter's ability to secure success in the highly competitive DeFi market. Ability.

• Given the dynamic and highly competitive nature of the DeFi field, there is uncertainty about the long-term sustainability of Jupiter technology.

• The later stages of airdrops are often accompanied by a surge in speculative trading, exacerbating market volatility. The situation is further complicated by industry heavyweights such as Uniswap’s founders doubting the long-term viability of Jupiter’s trading volumes, which they believe are inflated by airdrop-related speculation.

• The emergence of memecoins and speculative airdrops within the Solana ecosystem has increased uncertainty about Jupiter’s short-term potential, signaling a risky environment.

Conclusion

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