Jupiter (JUP) — what do we know about the leading DEX aggregator on Solana?
One of the decentralized applications based on the Solana blockchain is Jupiter, a young but ambitious project that has every chance to become a "unicorn" in its ecosystem. This article will teach you what Jupiter is, what functions its token performs, and whether the project has prospects.
What is Jupiter?
Jupiter is a gaining-popular DeFi protocol and DEX-aggregator in the Solana ecosystem. In many ways, the Jupiter protocol is similar to the 1inch aggregator; however, it is not powered by Ethereum.
DEX-aggregator was launched at the end of January 2024. Still, it has already become one of the top ten most extensive protocols in the Solana ecosystem and the leader among DEX-aggregators regarding trading volumes.
How does Jupiter work?
Jupiter aggregates data from several decentralized exchanges and allows users to find the most profitable cryptocurrency exchanges. However, Jupiter also has its liquidity.
In addition to standard digital asset trading (swaps), Jupiter allows exchanges using limit orders, supports bridging to transfer cryptocurrencies between networks, and provides a DCA (Dollar Cost Averaging) strategy — this feature allows you to set up automatic purchases of a certain amount at a specified frequency.
The bridge feature has become one of the unique features as few DeFi protocols support cryptocurrency exchange services. The Jupiter aggregator allows digital assets to be transferred between networks such as:
At the same time, users can use the bridges and compare them, choosing the most cost-effective option for transferring crypto assets from one network to another.
Another pleasant addition for traders is open-ended contracts, which are available in the beta version of the Jupiter platform. So far, the protocol only supports trading in SOL, ETH, and BTC contracts, but the number of assets will gradually increase.
Metrics
So far, Jupiter lags far behind giants like Uniswap, PancakeSwap, and SushiSwap regarding volume. As of March 2024, the number of assets blocked in the Jupiter protocol (TVL) reached only $379 million. Even among DeFi protocols on Solana, Jupiter ranked only 7th and 55th.
However, given the aggregator's very young age, this is a pretty good indicator. It also demonstrates rapid growth: Jupiter reached $379 million TVL less than two months after its launch. Not every project can boast such results.
Although Jupiter does not stand out among many well-known decentralized exchanges and DEX aggregators regarding the number of assets blocked in the protocol, the trading volumes are impressive: Jupiter ranks first in this metric among all aggregators, surpassing even the popular 1inch. According to DeFi Llama, Jupiter's trading volume has exceeded $1.5 billion, compared to 1inch's mere $534 million as of March 2024.
JUP token
JUP is a native SPL format management token issued on the Solana blockchain. It empowers its holders to vote for proposals and participate in the development of the Jupiter ecosystem.
In addition to governance, the JUP token has other uses, such as participating in liquidity mining, staking, and access to certain DEX aggregator functions.
Initially, 1 billion JUP tokens were distributed at the end of January 2024 during the airdrop among active users of the DEX-aggregator Jupiter, interacting with the protocol until November 2, 2023.
It is worth noting that, according to the project's tokenomics, the eirdrop is only allocated 40% of the total issuance, meaning that the team will allocate about 3 billion more for future distributions.
As of March 2024, 1.35 billion JUP tokens were circulating on the market — that's only 13.5% of the maximum possible issue, which is limited to 10 billion. Regarding capitalization, JUP ranked 65th among all cryptocurrencies, although it was listed on exchanges less than two months ago.
Expectations and prospects
The rapid development of the Solana ecosystem in 2023 has fueled much of Jupiter's popularity and rapid growth in trading volume. The rapid growth has also affected memcoins, which have "taken over" the Solana market. Due to all this, Jupiter has achieved high results and is at the center of events.
Another reason for the popularity of the Solana network and projects in its ecosystem is fast and cheap transactions. VanEck analysts predicted that by 2024, Solana may already be one of the three largest cryptocurrencies. Judging by market performance and dynamics, Solana has every chance of doing so.
As of March 2024, Solana ranks 5th in capitalization in the CoinMarketCap ranking, slightly behind BNB Chain: $83.2 billion vs. $88.2 billion. To overtake USDT, Solana only needs to "gain" a little over $20 billion in capitalization, which seems quite realistic, especially if the bullish market trend continues after bitcoin's ATH upgrade.
The growth of the Solana ecosystem will positively impact all of its key DeFi protocols, which include Jupiter. Consequently, the JUP token exchange rate will likely rise following the Solana blockchain's key metrics.
Unique features such as cross-chain bridge aggregation to find the optimal path for blockchain-to-blockchain transfers, DCA strategy, and low fees may also contribute to Jupiter's growth.