Jito Foundation Proposes Game-Changing Tokenomics Model: Will Buybacks Boost JTO Value?

Jito Foundation’s Bold New Tokenomics Proposal: Buybacks vs Fee Switch Debate

Jito Foundation contributor Andrew Thurman presented a mock-up for a new tokenomics model for JTO on Thursday, introducing the concept of potentially using buybacks to enhance value for the community. Thurman’s 12-page proposal aims to spark conversation around expanding the utility of Jito’s governance token. While the document is not an official governance proposal, it provides insight into Jito’s evolving approach to protocol revenue.

A New Approach to Tokenomics: Buybacks vs. Fee Switches

Jito, a liquid staking and MEV platform at the heart of the Solana ecosystem, currently generates fees as Solana usage grows. Thurman suggests that instead of simply accumulating revenue, the community should decide how to best reinvest these funds. He outlines two strategies for “recycling” value: buybacks or flipping a “fee switch”.

• Buybacks have gained traction in the crypto space, with examples like MakerDAO and Raydium. This method can help remove JTO from the market, reducing circulating supply and potentially boosting token value.
• A fee switch could redistribute protocol fees directly to token holders, an idea used by projects like GMX and Synthetix. However, Thurman points out that successful examples of fee switches are still limited in crypto.

Novel Reinvestment Models and Community Feedback

Thurman proposes two novel models for reinvestment: Buyback and Barter and Real Yield Gauges. In the Buyback and Barter model, Jito DAO would use fees to “barter” with other projects, potentially forming long-term partnerships. The Real Yield Gauges model, inspired by Curve, would allow users to stake funds in Jito pools and vote on how to reinvest fees.

Community members have also shared their thoughts, with drnick, another Jito Foundation contributor, suggesting a mix of buybacks in bear markets and yield-boosting during periods focused on growth.

Jito’s Competitive Edge and Future Prospects

Jito is currently generating around $10 million annually from JitoSOL fees and holds a dominant position within Solana’s ecosystem. However, Thurman acknowledges growing competition and emphasizes that Jito is still in uncharted territory regarding protocol growth.

As discussions continue, Thurman’s proposal provides a framework for future tokenomics strategies, reflecting Jito’s commitment to community-driven decision-making and innovation.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.