Étienne Girard
On Thursday, Jito Foundation contributor Andrew Thurman introduced a conceptual framework for a revised JTO tokenomics model, which includes a potential token buyback mechanism.
The 12-page proposal, designed to foster discussion within the community, aims to explore ways to enhance the utility of Jito’s governance token, JTO. While this document is not an official governance proposal, Thurman clarifies that it does not represent the formal stance of the Jito Foundation, JitoDAO, or any affiliated entities.
Jito operates as a liquid staking and MEV platform at the heart of the Solana ecosystem. With the platform and DAO accumulating significant revenue as Solana’s adoption grows, Thurman emphasizes the need for a community-driven strategy to utilize these funds effectively.
Rather than simply stockpiling treasury reserves, he suggests a balanced approach that combines reinvestment in the ecosystem (“recycling value”) with direct incentives for participants (“rewarding value”).
“Jito is uniquely positioned,” Thurman states, noting that 4% of all JitoSOL staking rewards are allocated to the Jito DAO as a programmatic fee. He highlights that few DeFi projects have generated such tangible value as quickly as Jito, making it a case study in the fast-evolving Solana ecosystem.
Rewarding Value: Buybacks vs. Fee Switches
Thurman explores two primary methods of distributing value to JTO holders:
- Buybacks – A mechanism where the DAO repurchases JTO tokens, reducing circulation and increasing token value.
- Fee Switches – Directing a portion of protocol fees to JTO holders, a model debated in communities like Uniswap but successfully implemented in projects such as GMX and Synthetix.
While fee switches have limited precedent in crypto, buybacks have been widely adopted, with notable examples including MakerDAO, Raydium, Jupiter, and Hyperliquid.
“Buybacks have gained traction in the crypto industry, likely due to their success in traditional financial markets,” Thurman writes.
That said, he acknowledges the absence of a universally successful buyback model, proposing two novel reinvestment strategies:
- Buyback and Barter – Jito DAO could exchange a portion of its revenues with other DAOs, securing long-term partnerships while removing JTO from public circulation. However, this approach carries counterparty risk.
- Real Yield Gauges – Inspired by Curve Finance’s CRV staking model, this system would allow users to stake in JTO or JitoSOL pools and collectively vote on how DAO fees should be allocated.
“This would create fresh utility for JTO and reinforce its role in the ecosystem, while also innovating on existing DeFi models,” Thurman explains.
A Jito Foundation contributor, “drnick,” responded positively to the proposal, suggesting that the DAO could toggle between buybacks and yield boosting depending on market conditions.
“During bearish cycles, buybacks could support token value, while in growth phases, rewards could incentivize participation and liquidity,” he stated.
Recycling Value for Ecosystem Growth
While rewarding value to token holders is a debated subject, reinvesting in protocol and community development is a well-established strategy. Thurman outlines several reinvestment models, including:
- Diversifying the DAO’s treasury by holding uncorrelated assets or stablecoins.
- Funding community initiatives, such as grants, hackathons, and developer incentives.
- Creating protocol-owned liquidity, turning JitoDAO into a liquidity provider to ensure market stability.
- Boosting staking and restaking yields to drive adoption of JitoSOL.
“Many community members believe that JTO restaking rewards are currently too low,” Thurman writes, suggesting that raising fees from 0.15% to 0.2% or higher could be a viable solution.
Jito’s Future in the Competitive DeFi Space
Despite generating over $10 million annually in JitoSOL fees, Jito faces increasing competition within the Solana ecosystem. Thurman emphasizes that now is the time for the community to define JTO’s long-term economic model.
Ultimately, his proposal serves as a starting point for discussion, and whether the DAO implements some, all, or none of these strategies remains uncertain.
“We are in uncharted territory,” Thurman concludes, inviting the Jito community to engage in an open dialogue on the future of JTO tokenomics.
