Jito Token Economics New Proposal: Can Buybacks and Incentives Reshape the Future of DeFi?

Andrew Thurman, a contributor to the Jito Foundation, recently proposed a brand new token economics proposal aimed at maximizing the value of the JTO token and promoting the continuous growth of the ecosystem through buybacks, liquidity incentives, and reinvestment strategies. This proposal has sparked extensive discussion within the community and may redefine the utility of governance tokens.

Core of the Proposal: Value Recovery and Value Rewards

Thurman's proposal spans 12 pages, suggesting that Jito utilize its growing revenue not only to accumulate funds but also to give back to the ecosystem. The proposal outlines two main strategies: "Value Recovery" and "Value Rewards." The former reinvests revenue into ecosystem development, while the latter redistributes fees to token holders.

Buyback Mechanism and Fee Conversion

The proposal suggests that Jito adopt a "Recovery and Reward" approach, balancing both mechanisms to maximize long-term value. One option is a buyback mechanism, similar to the successful practices of protocols such as MakerDAO, Raydium, and Jupiter. Buybacks can reduce the token supply, thereby increasing value for holders.

Another option is fee conversion, akin to Uniswap's revenue-sharing model. This would directly distribute protocol earnings to JTO holders. However, this model may attract regulatory scrutiny, as similar proposals have been questioned for resembling securities distribution.

Innovative Approaches: Buybacks and Barter, Real Yield Metrics

To further refine the token economics, Thurman introduces two innovative approaches:

Buybacks and Barter: Jito DAO could not only buy back JTO but also exchange revenue for tokens from partner projects under favorable conditions. This strategy can strengthen partnerships while reducing the circulating supply of JTO. However, counterparty risks such as project failures or token depreciation remain significant concerns.

Real Yield Metrics: Inspired by Curve Finance, this model allows JTO holders to stake in the JitoSOL or JTO liquidity pools and vote on how Jito DAO should reinvest protocol fees. This approach can enhance the governance role of JTO and provide direct incentives for long-term participants.