Will Revolution Begin in JTO: Proposal Combining the Most Successful Models on the Agenda - Coin Bulletin

Jito Foundation community member Andrew Thurman has presented a hybrid token economy proposal for the JTO token, which includes successful methods for many projects.

Andrew Thurman proposed a new tokenomic model to expand the use cases of the JTO token. This model includes buybacks and fee distribution mechanisms aimed at adding value to JTO holders.

Thurman noted that with Jito's growth in the Solana ecosystem, it is necessary to direct the revenues towards benefiting the community rather than just expanding the treasury. The proposed system offers options such as distributing rewards directly to token holders, investing in ecosystem growth, or implementing both strategies together.

These ideas can help JitoDAO better manage its revenue stream and provide a new use case for the JTO token.

Buyback and Fee Mechanism options

Jito operates as a platform in the Solana ecosystem offering liquid staking and Maximal Extractable Value (MEV) solutions. As the platform generates more revenue each day, how to use these revenues has become a crucial decision point for the community. Thurman noted that DAOs typically face two options: Either the revenue is reinvested in the ecosystem to contribute to growth, or it is distributed to community members to create incentive mechanisms. The proposed model for Jito is based on the “buyback and reward” strategy that combines these two methods.

The buyback method has been successfully implemented in major DeFi projects such as MakerDAO, Raydium, and Jupiter. In this model, the protocol uses the revenue it generates to buy back tokens from the market at a certain percentage. This aims to reduce the circulating supply while preserving the token value. The fee mechanism (fee switch) is a model implemented in some protocols that directly distributes the generated revenue to token holders. However, it is known that this method has been debated for a long time in platforms like Uniswap but has not yet been fully implemented.

Thurman also introduced two different innovative models for Jito: “Buyback and Barter” (Buyback and Barter) and “Real Yield Gauges” (Real Yield Gauges). In the Buyback and Barter model, JitoDAO can collaborate with another DAO using a specific ratio and establish long-term partnerships. Thus, instead of directly releasing JTO tokens to the market, a “locked” value is created. The Real Yield Gauges model is inspired by the CRV stake mechanism of Ethereum-based Curve Finance. In this model, users can vote on how the DAO's revenues will be distributed by depositing funds into pools containing JitoSOL or JTO.

Jito Foundation contributor "drnick" stated that a flexible strategy could be adopted for buybacks in bear markets and for increasing incentives in bull markets.

Reinvestment models for ecosystem development

In addition to directly distributing rewards to token holders, reinvestment strategies are also being evaluated to ensure the sustainability of the ecosystem. DAOs typically prefer methods such as diversifying the treasury, organizing hackathons, and providing funding for ecosystem development. However, Thurman presented a more unique proposal for Jito: acting as a liquidity provider for the DAO and offering incentives to increase JitoSOL stake rates.

Some JTO token holders criticized that the current restaking rewards are low. Thurman mentioned that increasing JTO's restaking fee to %0.2 or %0.25 from %0.15 could be considered.