Analysis

Bull vs Bear: JUP

Bankless unpacks the future prospects of Jupiter's JUP token.
Jack Inabinet Jack Inabinet David C David C Feb 6, 20242 min read
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Bull vs Bear: JUP

Jupiter's airdrop last week put 1 billion JUP into the hands of the Solana DEX aggregator's earliest users, but should airdrop recipients be holding onto these tokens?

In today's issue, two Bankless analysts take opposing sides of the argument, framing the bull and bear cases for the token's future performance.

Agree or disagree? Take it to the comments!

Let's kick things off with the bull case...


🐂 What's the Bull Case for JUP?

Speculation has ingrained itself as one of crypto’s leading use cases.

Exchanges that facilitate it present an alluring investment opportunity for those seeking to position themselves for outsized returns when future bull market activity kicks off an unprecedented wave of crypto speculation.

While aggregation has not emerged as a killer product on Ethereum, it is uniquely positioned to succeed on Solana thanks to the chain’s low fees, which make it economically feasible to trade across a large number of pools.

Jupiter, Solana’s leading exchange, takes advantage of aggregation to offer swappers the best possible price on their trades – an appealing feature for crypto newbies and DeFi pros alike – and is currently processing 80% of Solana’s swaps!

For degens not satisfied with spot crypto exposure, Jupiter offers a fantastic perpetuals product, which does hundreds of millions in volume daily, allows liquidity providers to earn 100%+ yields on their deposits, and offers traders 100x leverage on BTC, ETH, and SOL.

With its spot exchange facilitating the majority of Solana swaps and the ceiling on its perps products limited only by caps put in place to manage risk, the bull case for Jupiter shines bright.

- Jack


🐻 What's the Bear Case for JUP?

While it is true that Jupiter does it all, sometimes, that is not a good thing. Let’s look at some factors that could come together to form a Bear case for the center of Solana.

  • Airdrop Tokens Underperform: Airdrops often decline long term despite being initially attractive. This likely extends to most airdrops; when people get free money, they want to cash out.
  • Jack of all Trades, Master of None: Jupiter’s suite of offerings, from DCA tools to perpetual swaps, risks a lack of focus. If, for example, users prefer specialized platforms or a new DEX rises on Solana, Jupiter could see itself overextended and scrambling to double down.
  • ETH > SOL: Jupiter’s fortunes are linked to Solana's performance. While there may be some consensus around Solana outperforming Ethereum this cycle, it is good to remember that just a few months ago, the sentiment was quite the opposite. Further, in the broader context of DeFi, Ethereum still dwarfs Solana in activity.
  • Vampire Attacks: Given capital’s mercenary nature in crypto, vampire attacks, luring users away with better incentives, are an ever-present threat. This could significantly drain Jupiter’s liquidity and user base.

In sum, while Jupiter seems to have a solid footing at the moment, nothing is ever certain, especially in crypto.

- David

How Did Jupiter’s JUP Drop Go? on Bankless
Solana’s top aggregator airdrops 1 billion tokens.
David C

Written by David C

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David is a writer/analyst at Bankless. Prior to joining Bankless, he worked for a series of early-stage crypto startups and on grants from the Ethereum, Solana, and Urbit Foundations. He graduated from Skidmore College in New York. He currently lives in the Midwest and enjoys NFTs, but no longer participates in them.

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