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Jupiter Co-Founder Defends Controversial Token Sale Strategy

Jupiter, a decentralized exchange (DEX) built on the Solana blockchain, has recently launched its native token JUP on the market. However, the token sale process has raised some questions and criticisms from the crypto community, as the Jupiter team sold a large amount of JUP tokens on the day of listing, causing the price to drop significantly.

According to CoinMarketCap, JUP reached an all-time high of $2.04 USD on January 31, 2024, but then plummeted to an all-time low of $0.6213 USD on the same day, a decline of nearly 70%. The current price of JUP at the time of writing is $0.587 USD, with a market cap of $885,276,384 USD and a 24-hour trading volume of $1,116,933,168 USD.

Source: CoinMarketCap

In response to the controversy, Jupiter co-founder Meow posted a series of tweets on his [Twitter account], explaining the rationale behind the token sale strategy. He said that the team only sold 250 million JUP tokens, which is 2.5% of the total supply, and that they could have obtained more funds using other methods such as Initial DEX Offering (IDO) or Over-the-Counter (OTC) trading.

Meow claimed that the team chose this approach to create a fair and transparent market dynamic that benefits both the airdrop recipients and the prospective buyers. He said that by selling a large amount of JUP tokens at a high price, the team created a massive pool of liquidity that can absorb the selling pressure from the airdrop recipients, who received 50% of the total supply for free. He also said that this way, the buyers have assurance that there is a big pool to support the price and prevent it from crashing too much.

Meow admitted that the team took on the risk that they have zero certainty about how much they will actually end up with, as the community and those who have buyer remorse can sell their JUP tokens before the team. He said that if the selling pressure from the airdrops is too big and there is no or not enough demand, and the price goes below $0.4 USD, the team gets nothing.

Meow emphasized that the team did not do this because it was easy or because they wanted to make a lot of money, but because they wanted to experiment with a new concept that prioritizes users, does not hurt early launch pool buyers, and does not demoralize community hodlers. He said that the team thinks this system is a good one because it compels the team to price the token reasonably, backstops wild swings that hurt believers too much, and creates strong alignment and confidence between early buyers, team, and community hodlers.

Meow concluded his tweets by saying that the team is not doing this just for themselves, but for the good of Jupiter and the crypto ecosystem. He said that they are here to experiment and learn, and that time will tell if they are wrong or right.

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