Revamping tokenomics

Hey Everyone!

If you’ve been keeping track of recent discussions on $SOL eco coins vs the $AVAX coins, I am sure you have come across the high FDV slow death meme of Solana coins :point_down:

I consider JET protocol to be the best Solana DeFi protocol out of all else built out there, but the general sentiment made around me seriously ponder upon the +1.5billion token supply of JET to hit the market in the coming years.

There are a number of questions in my head, to list a few…

  1. Do we really need 1.7bn tokens in Jet Protocol to accomplish what we want to?

2.Do we really have enough demand driving mechanisms that can with stand the deluge of incoming 1.5bn tokens?

  1. Is it really healthy to have 1.7bn tokens in long term? I am cognizant that seed and private rounds have 1yr cliff, but given the high FDV what stops them from dumping their bags when their exit is at near half a billion FDV?

The reason as to why I am touching on this sensitive topic is because I am seriously concerned about the growth of JET protocol. We have to recognize that we are in a SATURATED market, we have a number of cut-throat competitor protocols (Solend, Apricot, Port Finance to name a few), each with a working product, strong backing, and each of them struggling with the same low circulation/high FDV tokenomics.

This really makes me wonder what can we do to turn things around for the protocol?

Step Finance was brave enough to recognize it and revamp their tokenomics. They burnt 37% of the token supply.

My suggestions-

  1. Consider burning supply.
  2. Renegotiate terms with private investors to make the protocol tokenomics more retail friendly ( I know agreements ought to be sacrosanct but It really doesn’t make sense when SOL DeFi is getting shredded the token is still trading at $0.5 BN FDV)

A protocol with healthy tokenomics caters to best interest of every $JET stakeholder in the ecosystem be it the team, VCs, or the community.

I am curious to hear what you all think of this? Please share your suggestion to improve the tokenomics, if any.

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I appreciate you sharing your thoughts and being measured with this post.

I personally feel the JET token needs to serve it’s purpose as a governance mechanism, first and above all. To that end, I think the larger supply provides more options for the DAO to make adjustments over the long term to enable both active and protocol positive governance.

In the future the DAO may very well decide to lower supply via burns or increase DAO treasury holdings via buy backs, lockups, etc. I would at this point in time be against the Jet team making these decisions without the DAO being able to vote on such a proposal.

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The FDV debate is stemmed by a lot of short time frame demands. It’s fueled mostly by the bull market and mispricing of the timelines between traders and protocol builders.

Just to clarify in broad terms, only roughly 50% of those JET tokens are vesting and scheduled for unlock over the next ~3 years, the rest have no unlock schedule and a large portion of them are under governance control, and in the medium term the staking & governance module we’ve built, JetGovern, will have domain over those funds.

Team, advisor, and investor unlocks are linear. This is not a deluge of tokens!

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At Jet we’ve been meticulous about our tokenomics, and we understand to the community it seems like time drags on and there’s minimal updates about what’s next, but I can reassure you personally there’s a substantial amount of time and resources at work on the protocol, token utility, and version 2 will be rolling out over the next several months, first on devnet then on mainnet.

We haven’t done liquidity mining for this reason, we just don’t feel our product warrants it yet. Many of the other lenders are forks of the SPL program library lending reference implementation with LM rewards bolted on with marginal innovation that to me isn’t inspiring in any stretch of the word. The market is correctly pricing them in their current state.

We don’t feel there’s any benefit for Jet as a protocol to go compete in that field on those merits, we’re not here to recycle tech and fight over vanity TVL metrics, we’re here to push the envelope and put in the time and engineering to build better lending products that improves the market, and that’s what we’re doing day-in, day-out. Again, more communication is incoming that’ll explain this in greater detail!

Our MVP is just the first iteration of something that’s substantially better, more useful, more groundbreaking, that will underpin and facilitate a much more robust lending and liquidity environment that creates more value for lenders, borrowers, and traders, and pushes open source Solana development forward. JET token utility will be much more apparent going forward in version 2.

The airdrop announcement is just the beginning of a deluge of new announcements soon on what we’ve been building and where we’re going. Also notice that we haven’t made unilateral decisions about what collateral types should be added to the protocol, this is for the community decide in the governance votes we have following the retro LP airdrop.

I’m personally looking forward to kicking off and refining governance. It’s going to be hard but simply by holding votes we will improve community engagement and make sure we are building a better protocol with maximum community input.

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