[Jito DAO considers spending $29 million for liquidity mining]
The DAO based on Solana's liquidity staking service Jito is considering a proposal to use 7.5 million of its native JTO tokens for liquidity mining. At current prices, this is equivalent to about $29 million in the DAO treasury. 3.1% of 240 million JTO.
This is the second governance proposal for Jito DAO, following a profitable JTO airdrop last December. The proposal was drafted by DeFi research firm Gauntlet, one of 17 backers of the Jito Foundation, which recently became independent due to strategic differences with Aave’s DAO.
Jito operates the largest liquid staking service on Solana, ranking first in total value locked (TVL) according to DefiLlama. 78% of Solana validators run a forked version of its Solana validator called Jito-Solana. Part of the protocol’s Maximum Extractable Value (MEV) rewards, which are primarily tips traders pay validators for expected trades to be executed, are distributed to holders of JitoSOL’s liquidity staking tokens.
Recently, the MEV collected through Jito has exceeded the MEV paid to Ethereum validators.
Jito’s recent TVL growth stems in part from a points system that allocates quota to on-chain users in JTO airdrops and drives the flow of funds to the protocol. However, after the points-based rewards ended, Jito spent relatively little on the incentive program. Notably, this comes at the same time that its Solana liquid mortgage competitors Marinade and Blaze are making massive incentive investments, as Gauntlet stated in its proposal.
In order to remain competitive after the point incentive ends, Gauntlet recommends that Jito invest some of its treasury funds in "various liquidity mining strategies." The funds will be managed by three members of the Jito Foundation and two members of Jito Labs.
Currently, the governance proposal has not yet received community comments. According to Jito’s governance documentation, the proposal must be made public for 30 days before being submitted to the DAO voting platform.
Jito Foundation representative Ian Unsworth expressed support for the proposal, saying it would be “great to see a thoughtful discussion of liquidity incentives.”
