Jupiter announced multiple things at their flagship conference, Catstanbul, last month. TLDR — it was a lot. There was a burning cat, acquisition announcements, and last but not least, the protocol’s open admittance of its ambition to become bigger than its current home. In today’s piece, we dissect Jupiter’s recent business strategies and why given enough times, every crypto app that owns the users will vertically integrate to capture maximal value. Let’s dive in.

Recap of the events.

• Acquisition. Jupiter acquires a majority stake in Moonshot, the viral mobile trading app that has reportedly generated $35M in fees, especially after the Trump memecoin mania, and a full acquisition of Sonar Watch, a Solana DeFi portfolio management tool.
• Fund. Jupiter is working with Shaw from ElizaOS to allocate $10M for AI devs that are launching via the Jupiter launchpad.
• Token buybacks. 50% of Jupiter exchange protocol fees will now go towards buying back JUP.
• Burning. 3 billion JUP tokens worth ~$3.6B have been burned to reduce emissions and decrease the platform’s FDV.
• Jupnet. An omnichain network that aims to aggregate all of crypto in one single decentralized ledger for maximum ease of use for users and developers.

Candidly, this is one of the best product roadmap and new initiative announcements I’ve seen in the past few quarters. The Jupiter team’s ability to execute is top-notch, from the extremely detailed communication (Meow literally tweeted essays on a daily basis) to the level of transparency they’re trying to uphold with their communities.

Here’s a prime example:

This transparency audit explained all the key movements done by the Jupiter team. “We’ve been posting and tracking the token flow since genesis, and over 2 audits, accounted for every single one of our tokens (except for 1 JUP) and consolidated tokens into recognized wallets.”

Read the last sentence again. It’s imperative for any crypto protocols that have TGEd to do their best to track the ownership of every single one of their tokens. Similarly, a publicly traded company will have a very clear picture of the ownership stack of its equities. In crypto, this is harder to do as blockchain rails are permissionless, but there are tools that can help the team do this exercise with a decent level of accuracy.

Meanwhile, Uniswap…

Anyway, enough glazing of the cat.

Given Enough Times, Every App Will Vertically Integrate

The point of today’s piece is to remind crypto founders that business strategies in a permissionless environment are different in a permissioned environment.

Outside of crypto, businesses can build moats via regulatory capture, lengthy B2B contracts, and other forms of proprietary innovation.

In crypto, the same types of moats are significantly weaker because of the permissionless nature of blockchain technology. Everybody can build a product on top of each other and users have almost unlimited alternatives.

As a result, all that matters is brand, user experience, and community. This is because given enough time and the maturity level of our industry, we’ll see more experienced operators come onto our scene and build on top of the existing infrastructure, vampire-attacking the incumbents.

Ironically, it’s kinda similar to what Deepseek is currently doing to OpenAI.

Alas, in crypto, moats eventually settle down to:

• Brand -> People trust you
• True Community -> People want to be a part of your organization and movement (sense of belonging and actual ownership via rev share)
• User Experience -> People love your products

Aggregation in a Permissionless Environment Is Smart

Before Jupiter’s success, many were skeptical of the aggregation model because it hasn’t boded that well in terms of market capitalization comparison in EVM. 1inch wasn’t able to surpass Uniswap’s value because users are still opting to use Uniswap (too lazy) or other MEV-friendly DEXs such as CoW Swap. However, in Solana land, Jupiter was able to convince users that they have the best swapping experience, aggregate all the users, and capture the values.

To be frank, I wasn’t sure when this exactly happened. I remember using Orca and Raydium during the DeFi summer of 2020-2021, as well as using Jupiter in its early days. If my memory serves me right, the experience of using Orca and Raydium was quite bad towards the end of DeFi summer because of the lack of token standards (multiple versions of bridged USDC) and the UIs themselves were sometimes quite laggy. The remnants of this bad UX can still be seen even a year ago.

Jupiter used to highlight its routes to show users that it provides the best rates when swapping tokens. In retrospect, that was a great move because, unlike Ethereum, there wasn’t a clear market winner in the Solana DEXs landscape back then. Even when Raydium had the highest market share, its market dominance was nowhere near Uniswap in Ethereum.

Brilliant Business Strategies and Ops

In short, Jupiter executed much better on its core focus—aggregating the swapping experience for Solana users. Many protocols have tried this in EVM land but without much success. It also helped that the Jupiter team was initially started by Meow under Racoon Dev, meaning that during the bear market, it could minimize burn as much as possible by having a few engineers in lower-cost emerging markets maintain its user experience.

Not everything has to be seen from a “sexy startup angle”, many successful founders in crypto started by running dev shops. Running these types of “conventional service businesses” teaches you savvy business operations experience particularly around being extremely efficient with cost and how to opportunistically tap into certain market verticals.

Fast forward to 2024, we can see this savvy business operations experience coming out of the Jupiter team.

Within 12 months, the Jupiter team acquired 5 teams:

• Moonshot: acquired a majority stake in the mobile-first meme trading platform.
• SonarWatch: acquired the onchain portfolio tracker.
• Ultimate Wallet: acquired the self-custody wallet.
• Coinhall: acquired the decentralized trading terminal.
• SolanaFM: acquired the blockchain explorer.

Forgive my French, but this is a fucking genius move. I don’t think I have to go into the details, but some of the businesses getting acquired had significant competitions and challenges in the markets that made the team a prime acquihire target. Also, I don’t have any private information, but I won’t be surprised if the majority of the acquisitions are done via JUP tokens. Given JUP’s current FDV, the Jupiter team got a pretty good deal on top of essentially expanding their cap table/team members with capable builders.

Takeaway & The Future of Crypto Apps

This idea isn’t new. Dan Elitzer from Nascent wrote about an appchain-centric future in 2022. Titled “The Inevitability of UNIchain”, the argument is the following:

“Therefore, once applications reach a certain size, it starts to become increasingly important to have more direct control over their access–and their users’ costs for accessing–blockspace. The solution to this is a chain or rollup where access to blockspace is managed by validators whose primary concern is the success of a single application–their own.”

I posit a similar but much simpler human-centric view to look at this. Stripping everything away, it’s simply human behavior in a capitalistic business society to optimize for capturing more value. It’s just the same old “vertical integration” above any technical arguments around blockspace and decentralization. Crypto, after all, is still being run by humans — we’re not above this innate desire to own more of the value chain. Let’s be pragmatic.

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