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Jupiter Airdrop Draws Flak Despite Strong Support

Critics have come down heavily on how the JUP token was launched barely 24 hours after its highly anticipated airdrop. 

There have been concerns that Jupiter has been using the open market opportunity to raise funds without users being completely aware this was the case. 

Concerns About Airdrop 

Earlier during the week, the Jupiter team had outlined a strategy beyond a simple token giveaway. The strategy aimed to make the JUP token the cornerstone of DeFi 2.0, focusing on expansive growth, ecosystem initiatives, and a governance model that would eventually incorporate community decision-making. The “50/50 Tokenomics” token minting ritual and cold wallet release conditions demonstrated an approach to managing token supply, distribution, and security, ensuring long-term project sustainability and community involvement. 

However, a few misunderstandings have led sections of the community to believe that the Jupiter team’s actions post-airdrop resemble that of a public token sale. A vital issue centered around the Jupiter team’s method of offering the JUP token on the open market. This, according to the team, has doubled as a capital-raising strategy. However, critics have pointed out that this was not adequately communicated with participants and led to several discussions about transparency and whether the buyers were making informed decisions. 

One user on X pointed out that Jupiter had put “moon protection” on the token, meaning its price could not exceed 0.70 until the team secured $100 million, and that people were participating in a sale without knowing it. 

“Actually hilarious that none of us realized that Jupiter team put in moon protection on the launch Opposite of plunge protection Price can’t go up past .70 until they rake in $100m. Kinda unreal. Definitely bearish People participating in a sale without even realizing it.”

Jupiter Addresses Concerns 

Jupiter’s founder took to X to alleviate such concerns, stating the team would have received more funds had they opted for an initial DEX offering or an over-the-counter deal. They added that the reason why they launched the token in this way was to ensure that airdrop recipients could sell into a massive pool while interested buyers would be assured that there was a big enough pool to absorb the selling pressure from airdrops. 

“If I did an OTC deal or a regular IDO, we would have gotten a similar amount, if not more, without any of the confusion that comes with pioneering new concepts and absolutely zero risk. Trust me, that was easy. However, by doing it this way, airdrop recipients get a massive pool to constantly sell into, while prospective buyers have an assurance that there is a big pool to absorb big selling pressure from airdrops.”

Another user accused the Jupiter team of using the ICO to drive fake demand. However, Jupiter already addressed this in a document describing the tokenomics of the JUP token. The detailed document addressed the inflows and outflows of the token, where they would be stored, and who would be holding the tokens. However, Jupiter’s founder acknowledged the team made mistakes when selecting the price range to launch the token. 

Unwarranted Criticism 

However, Blockworks research analyst Ren Yu Kong believes the criticism around the airdrop is unwarranted, stating, 

“Fundamentally, Jupiter set a price and a valuation that they were willing to launch at, in this case, $4 – $7 billion FDV. It’s no different to investment bankers setting an IPO price, which a company is willing to sell shares at. No one is forcing participants to buy if they don’t like the valuation in the launch pool. Granted, maybe one would have preferred more free market price discovery, but that’s easier said than done.”

JUP Surpasses $450M Trading Volume 

Meanwhile, the JUP token registered over $450 million in trading volume on Jupiter’s platform alone. A trader going by the name “Ted Talks Macro” stated that Jupiter had processed over 1 million transactions in the one hour after the claim of JUP was made possible. 

“Impressive showing from Solana here on the $JUP launch. - 1.2M tx processed on @JupiterExchange alone - Tracking to do at least $1B in volume today (Solana will likely do ~30-40% more).”

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 2/2/2024

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