Proposal for Distribution of Jupiter Exchange Fees to Stakers

Jupiter Products
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Proposal for Distribution of Jupiter Exchange Fees to Stakers

Proposal Summary

This proposal suggests that 25% of the fees generated by the Jupiter Exchange be allocated to JUP token stakers. This change aims to enhance the decentralization of the platform and increase the intrinsic value of the JUP token, benefiting both the community and the long-term sustainability of the exchange.

Background

Currently, the fees accumulated on the Jupiter Exchange are solely retained by the Jupiter team. While this has supported the initial development and maintenance of the platform, it is imperative to evolve towards a more decentralized model. By distributing a portion of these fees to JUP token stakers, we can incentivize broader participation in the ecosystem and align the interests of the community with the success of the platform.

Proposal Details

Fee Distribution Percentage. 25% of all fees generated on the Jupiter Exchange will be allocated to JUP token stakers.

Implementation Mechanism -

A smart contract will be developed to automatically distribute the allocated fees to stakers.

Fees will be distributed proportionally based on the amount of JUP tokens staked by each participant.

Frequency of Distribution - Fee distributions will occur on a weekly basis to ensure timely and regular rewards for stakers.

Rationale

  1. Increased Decentralization. Allocating a portion of the fees to stakers decentralizes the revenue flow, reducing the concentration of financial power within the Jupiter team and distributing it across the community.
  2. Enhanced Token Value. By providing financial reward with a cut of the fees, the demand and utility of the token will likely increase, driving up its value.
  3. Sustainability. A more decentralized fee distribution model can contribute to the long-term sustainability and resilience of the Jupiter Exchange, as it aligns the incentives of the community with the platform’s success.

Conclusion

This proposal to allocate 25% of Jupiter Exchange fees to JUP token stakers represents a significant step towards a more decentralized and community-driven ecosystem. By aligning the interests of the Jupiter team with those of the token holders, we can create a more equitable, sustainable, and prosperous platform for all participants.

I encourage the community to support this proposal and help drive the future success of the Jupiter Exchange.

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This will certainly add massive value to the JUP token, and compete against UNI’s revenue share proposal.

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interesting proposal but doesnt account that 70% of fees are already going to JLP holders

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I don’t think this is viable in the long term for Jupiters development as a dex aggregator or DAO. We’re talking about moving a massive chunk of funds out of the already existing budget and giving it away. I agree that it creates a demand for Jup and makes it beneficial to hold, but I don’t think it’s viable.

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this proposal certainly enhances further decentralization and accrues value to JUP
when will the proposal go to Voting ?

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I am hopeful it will be moved to a vote. It certainly is one of the more important proposals being discussed.

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Agree with this, the JUP token would be more decentralized, and have less inflationary sell pressure. Exchange fee sharing would give JUP stakers more incentive to hold and promote price appreciation despite a lot of token airdrops ahead.

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Ooo :eyes: this would increase the value of Jup crazy and would moon it! Would be a huge call to make though!

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This will certainly add massive value to the JUP token

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Can you expand upon 1. and 3. in the “Rationale”?
How does this increase decentralization for JUP? You’re proposing revenue sharing. Revenue on the site (that isn’t already shared) is earned as a small fraction (0.1%) of DCA and Limit Orders denominated in the tokens of the orders, NOT denominated in $JUP.
How does this promote sustainability? What are you, me, and the overwhelming majority of $JUP stakers doing to to actually improve the website and develop new features? The answer is nothing, so you’re proposing cutting the compensation pool of those who are (i.e. the Jupiter team) by 25%, and expecting the site and functionality to be more resilient and sustainable? I don’t know about you, but if I received a 25% pay cut, I would be significantly less motivated to keep building and shipping features, let alone maintaining existing ones. I would actually consider immediately quiting, and certainly start looking for a new job. Why wouldn’t members of the Jupiter team do the same?

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Expansion on Points 1 and 3

Expansion on point 1 Increased Decentralization

Allocating 25% of the fees generated by the Jupiter Exchange to JUP token stakers increases decentralization by redistributing the financial benefits of the platform to a broader base of participants. Currently, the fees are concentrated within the Jupiter team, which centralizes financial power.

By distributing these fees to stakers -

Diverse Incentives

The financial rewards are spread across a wider community, incentivizing more users to participate actively in the ecosystem. This leads to a more decentralized structure where various stakeholders have a financial interest in the success and security of the platform.

Community Engagement

The broader participation of stakers in earning fees fosters a more engaged and invested community. This engagement can translate into more feedback, suggestions, and contributions from the community to improve the platform.

Distributed Governance

By giving stakers a share of the revenue, they are more likely to participate in governance decisions. This enhances the decentralized decision-making process, aligning the platform more closely with the interests of a diverse user base.

Expansion on point 3 Sustainability

Promoting sustainability through this proposal involves several key points-

Alignment of Interests

When community members benefit directly from the platform’s success, their interests align more closely with the long-term health and growth of the platform. This can lead to increased loyalty and support for the platform.

Incentivized Participation

While the direct contribution to developing new features might not come from the majority of stakers, their financial stake in the platform can motivate them to support and advocate for the platform in other ways, such as promoting it, providing user feedback, and participating in governance.

Financial Resilience

A decentralized revenue model can make the platform more resilient to changes in team structure or market conditions. By having a diversified base of stakeholders who are financially invested in the platform, the exchange can potentially tap into a wider pool of resources and support during challenging times.

Community-driven Development

While the immediate impact might be a reduction in the compensation pool for the Jupiter team, the long-term vision is to foster a community-driven development model. As the community becomes more invested, there can be opportunities for collaboration where community members contribute ideas, or resources to the platform.

Addressing the Questions Raised

Decentralization and Revenue Sharing

The proposal increases decentralization by transforming the revenue model to include the community. This change ensures that a wider range of participants share in the platform’s success, reducing the concentration of financial benefits within the Jupiter team.

Sustainability Concerns

The sustainability aspect hinges on aligning the community’s incentives with the platform’s long-term success. While it’s true that a 25% reduction in the compensation pool might seem to demotivate the Jupiter team initially, the goal is to create a more resilient and community-supported platform. By involving the community more directly in the financial success, I hope it builds a more robust support network. One cannot exist without the other. It only makes sense for true sustainability both jup team and community, share in revenue gains.

My question to you is why not invest in web2 companies if you are against these basic web3 ideals I am proposing.

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Can you please clarify the web3 “ideals” you are referring to? What you are describing/proposing is a community seizure of assets, in this case where the assets are the entitlement to platform revenues (outside of the scope of the JUP governance token, by the way). Currently, the Jupiter team owns 100% of those assets, and what you are proposing is for 25% of them to essentially be seized. I do not think that seizing property is a web3 “ideal.” Decentralization refers to the transfer of power, which is what the DEX allows in the form of being able to swap, place limit orders, DCA, etc. with zero or limited fees, and with very minimal barriers to entry. However, you’re taking that a step further, and arguing that we should also be entitled to 25% of those “fees” for no real reason besides it adding value to the token. This is not truly in the spirit of decentralization and, as I highlighted and you dismissed, would certainly and significantly jeopardize the long term sustainability of the platform. Currently, the code is not open source, and the team obviously has a fairly unique set of skills to be able to continue to develop and deliver products, and collaborate with other members of the Solana and crypto communities. Those skills are valuable, and the revenue that they generate on the very modest fees should not be seized by anyone under the guise of “for decentralization and sustainability.”
Again, I currently receive zero percent of revenue, and am coming at this as a fellow $JUP staker and DAO member. I don’t think I’m entitled to a share of the revenue the team has rightfully earned from a site they built and run and improve, just because I received some of the $JUP tokens that they generously airdropped and which they did to govern the LFG Launchpad and DAO Treasury funds - NOT Jupiter team revenue. This is a huge overstep and overreach.

Apologies for any typos. I actually typed this up myself…

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I propose that we bring this matter to a vote. I believe your perspective aligns more closely with traditional Web2 companies rather than Web3 principles, which aim to decentralize power, governance, and revenue.

Your repeated attacks on my proposal in the Discord channel have been noted, and I have responded to your concerns multiple times. We will just have to agree to disagree on this issue. I have done my best to explain my stance. I cannot further clarify any better why your perspective is mistaken.

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We can agree to disagree, but let us do so in a respectful way. My perspective is not “mistaken,” it is just different from yours. That’s the whole point of discourse, and why we have this forum and the Discord - to respectfully go back and forth, and try to convince one another towards a hopeful consensus and for the betterment of the community. My concerns about the impacts on sustainability and the precedent that this would set regarding the seizure of assets outside of the purview of the DAO have not been allayed, so I remain in disagreement. There’s no doubt that this proposal, if it were to pass in isolation and with no consequences (e.g. team member demotivation/departure), would increase the value of $JUP in the short term, but I don’t believe that it will be value accretive longer term, because of the consequences I mentioned. We need a much larger community base and further growth and development before something like this could be seriously considered and discussed - meow mentioned a 10x user base goal back in February explicitly, in response to questions about revenue sharing then, which several people (including myself) mentioned or linked to you in Discord.
Nevertheless, if you want to leave it here, and agree to disagree, we certainly can. Live long and prosper, friend.

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I don’t think putting this to a vote is a good idea. Not while the proposal has unresolved issues. The DAO has no authority over Jupiter fees. Furthermore, JLP is already the revenue-sharing mechanism belonging to Jupiter.

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I have been very respectful throughout our discussions. Unfortunately, you refuse to allow the conversation to progress. Despite my efforts to address your points comprehensively, you repeatedly ignore the explanations provided and return to the same questions.

At this point, it’s clear we are at an impasse. Your questions have been answered numerous times over the past two weeks, yet you continue to dismiss these responses. This approach is not fair to the discussion, as it prevents the conversation from evolving and exploring new dimensions.

This is why my only reasonable response to you is that you are mistaken and wrong. And that is a lot more respectful then your previous snarky response to me.

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Friend, there is no need to resort to ad hominem attacks. Like most, I have many shortcomings, and am many things, but “snarky” is not one of them. I am sorry if my questions and concerns offended you.

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Instead of taking revenue from Jupiter, what if we started charging a very small fee (like 0.001%) on the coins we swap, similar to Uniswap, and allocated half of this fee’s revenue to the DAO treasury and combined the amount in the treasury with Jupiter ASR Rewards? This way, the team’s income would increase and they would be motivated, and the DAO’s income would increase and they would be incentivized. I think this would benefit DAO stakers in the following way: as it is known, there are 100 million Jupiters waiting to be distributed. Initially, these were to be given out at the end of 3 months, but to encourage longevity, it was spread over 6 months and divided 50/50. This is a very reasonable decision for the next 6 months of Jupiter. But what will happen after 6 months? Have you looked at the fee revenues obtained from the launched projects? They are almost negligible. Even now, more than 90% of the money we will receive as ASR reward is made up of JUP rewards. Once this reward is gone, the LFG launchpad will no longer be sustainable. This will negatively affect the DAO.

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Maybe I am overlooking something on first glance, but it seems like that would increase the value of JUP and at an interesting and marketable utility feature in the bigger picture. Pretty cool!

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Well, I have JLP and I don’t receive anything.