coindesk.com
Jupiter’s JUP tokens have racked up billions of dollars in trading volumes and amassed thousands of holders, days after a massive $700 million airdrop to users within the Solana ecosystem that raised some concerns around its distribution mechanism.
At the time of writing, the token exchanged hands at 60 cents, giving it a market capitalization of just over $800 million, data shows. Jupiter is a decentralized exchange (DEX) that routes orders to several other Solana-based exchanges and executes the best available price for an asset.
On Wednesday, the DEX rewarded its users by airdropping them JUP tokens, based on their activity on the platform. It also offered the tokens on the open market using a trading pool, so that investors could buy JUP and airdrop recipients could sell their newly-minted tokens.
The trading pool allowed Jupiter to offer tokens in a specific price range, where the price action is driven by market forces and how much liquidity the platform attracts over time, technical documents show.
However, this tactic drew the ire of some crypto market observers as they likened the pool sales to an initial DEX offering (IDO), instead of an airdrop. In an airdrop, a platform rewards its users by giving them tokens, whereas in an IDO, the developer team typically sells their holdings to market participants.
Jupiter's trading pool tactic is being criticized for being an IDO disguised as a fair market pool, with some observers claiming that the developer team sold over $200 million worth of JUP tokens through the market pool.
The drama caused prices to slide as low as 56 cents on Thursday, price data from Birdeye shows.
But most of these allegations have been dismissed as “blatantly false” by Jupiter founder @weremeow, who said over multiple posts on X that the sale’s mechanism had been mischaracterized.
Another rumor later made the rounds that Jupiter could remove the liquidity it was providing seven days following issuance, causing some to term it a “rug pull.” However, this rumor was quickly quashed.
“The launch pool is there for 7 days to absorb any selling pressure from airdrops or buyer's remorse, which I believe to be sufficiently long,” meow said Thursday. “Conversely, new buyers have confidence that there is a buffer for selling pressure as well.”
All tokens in the pool would remain in the team treasury or be used for further liquidity provision in the future, he said in a separate X post. The sale itself acted as a testing bed for Jupiter’s LFG launchpad, a planned platform that would let the project issue tokens to Solana users in the future, meow said.
Meanwhile, the Solana community has mostly expressed support for the token sale process and design – citing transparency and the lack of venture capitalists holding tokens as two key benefits.