Author: Jack Inabinet, Bankless
Jupiter’s airdrop last week put 1 billion JUP into the hands of the Solana DEX aggregator’s earliest users, but should airdrop recipients hold the tokens?
In today’s issue, two Bankless analysts take opposing views, building bull and bear case cases for the token’s future performance.
What’s the bull case for JUP?
Speculation has become one of the main use cases for cryptocurrencies.
When future bull activity triggers an unprecedented wave of cryptocurrency speculation, the exchanges that facilitate the process provide attractive investment opportunities for those seeking massive returns.
While aggregation on Ethereum has yet to become a killer product, it has a unique chance of success on Solana due to the Solana chain’s low fees, which make trading across massive liquidity pools economically feasible.
Jupiter, Solana’s leading exchange, leverages aggregation to provide the best possible price for trades—an attractive feature for both crypto newbies and DeFi pros—and is currently processing 80% of Solana’s trades!
For those “degens” (extreme risk investors) who are unhappy with spot cryptocurrency exposure, Jupiter offers an excellent perpetual contracts product with hundreds of millions of dollars in daily trading volume, allowing liquidity providers to leverage on their deposits Earn over 100% returns and provide traders with 100x leverage on BTC, ETH, and SOL.
With its spot exchange facilitating the majority of Solana trades and its perpetual contract offering only being capped by limits set to manage risk, the bullish case for Jupiter is clear. ——Jack
What is the bear case for JUP?
While Jupiter certainly does it all, sometimes that’s not a good thing. Let’s take a look at some of the factors that could combine to make a bear case for Solana Center.
While Jupiter does offer a full range of services, sometimes, that’s not a good thing. Let’s take a look at some factors that could combine to create a short case for Solana Center.
Airdrop tokens underperform: Although airdrops are initially attractive, they tend to decline in the long term. This probably extends to most airdrops; when people get free money, they want to cash out.
“Jack of all trades, master of none”: Jupiter’s various product suites, from DCA tools to perpetual contracts, run the risk of lacking focus. For example, if users prefer a dedicated platform or a new DEX emerges on Solana, Jupiter could find itself overextended and scrambling to double down.
ETH > SOL: Jupiter’s fate is tied to Solana’s performance. While there may be some consensus that Solana will outperform Ethereum this cycle, it’s worth remembering that just a few months ago the sentiment was quite the opposite. Additionally, Ethereum’s activity still dwarfs Solana’s in the broader DeFi context.
Vampire Attacks: Given the mercenary nature of capital in crypto, vampire attacks are an ever-present threat, luring users away with better incentives. This could seriously deplete Jupiter’s liquidity and user base.
Overall, while Jupiter seems to have a solid foundation at the moment, nothing is certain in the crypto space, especially in the crypto space. ——David