$70 million buyback futile? Jupiter's strategic pivot, JUP airdrop scale sharply reduced to 200 million tokens

Solana ecosystem leader aggregator Jupiter Exchange is facing a critical crossroads in its tokenomics model. On January 4, 2026, co-founder Siong publicly questioned the effectiveness of the ongoing JUP buyback program on social platforms, revealing that over the past year, more than $70 million USD was spent on buybacks, yet the token price remains down nearly 89% from its all-time high, with minimal results.

Meanwhile, the team announced a significant reduction in the originally planned 700 million JUP airdrop to 200 million, aiming to ease market sell pressure and more precisely reward genuine users. These measures have sparked widespread discussion among industry leaders, including Solana co-founder Anatoly Yakovenko. The market quickly responded, with whales betting on the long-term value of the strategic adjustments, investing over $12 million USD to establish multi-asset leveraged long positions including JUP. This event concerns not only Jupiter’s future but also touches on the core question of how current crypto projects can optimize fund utilization, balance short-term market pressures, and support long-term development.

Strategic Reflection: Why Did the $70 Million Buyback Fail to Boost JUP Price?

Early 2026, Jupiter’s team posed a sharp and honest question to its community: Should we stop the JUP token buyback? The context for this question is a set of disappointing data. According to co-founder Siong, the project had invested over $70 million USD of protocol revenue last year into buybacks on the open market. These repurchased tokens were locked for three years to reduce circulating supply, theoretically supporting the token price. Yet, the market response was cold. Despite the large investment, JUP’s price hovered near multi-month lows, currently around $0.205, down nearly 89% from the $1.83 peak at the end of 2021, performing far worse than many other Solana ecosystem assets during the same period.

This outcome prompted internal reflection on the rationality of the buyback strategy. Siong stated plainly in community discussions: “The community must decide whether continuing buybacks helps us or if these funds could create more value elsewhere.” He highlighted a core contradiction: the project allocated most of its protocol revenue (which had previously committed to using 50% of fees for buybacks) into this seemingly “stabilizing” operation, but with extremely low capital efficiency and minimal impact on the token price. Could those $70 million USD have been better spent on product development, user experience upgrades, or ecosystem incentives? There’s no definitive answer, but it marks a major shift in Jupiter’s management thinking—from mechanically executing a predefined deflationary model to adopting a pragmatic, results-based approach with dynamic adjustments.

This reflection is not isolated; it reflects a growing industry consensus: simple financial engineering (like buybacks and burns) is losing effectiveness without strong fundamentals and clear value capture scenarios. The market no longer pays for “deflation narratives” alone, but focuses more on actual utility, cash flow generation, and project growth prospects. Jupiter’s buyback dilemma is essentially a microcosm of its current inability to establish a sufficiently compelling “reason to hold” for JUP. When investors see no clear benefit beyond speculation, any supply-reduction operation risks being overwhelmed by broader market sell pressure.

A Sudden Shift in Airdrop Strategy: From 700 Million to 200 Million Tokens

Alongside the buyback reassessment, Jupiter’s team made a major adjustment to another key token distribution plan—the airdrop. The official announcement states that the upcoming JUP airdrop will be scaled back from the original 700 million tokens to 200 million. This over 70% reduction aims to mitigate potential sell pressure after listing, stabilize the token price, and ensure rewards more accurately flow to genuine, active contributors.

Under the revised plan, the 200 million JUP airdrop will be more finely allocated. 175 million will go to active users with on-platform trading activity, ensuring rewards are tied to usage. The remaining 25 million will be used to incentivize users who stake tokens during the snapshot period, encouraging long-term holding and engagement. Additionally, the project reserves 200 million JUP for a long-term staking pool, and 300 million tokens will be locked to support future ecosystem development and expansion. Another 300 million tokens are designated as ecosystem reward funds but will not enter circulation immediately to avoid adding short-term sell pressure.

Core Data on Token Distribution After Adjustment

Original total airdrop: 700 million JUP

Adjusted total airdrop: 200 million JUP (reduction of 71.4%)

Active user allocation: 175 million

Staking user allocation: 25 million

Long-term staking pool reserve: 200 million

Ecosystem development lock: 300 million

Ecosystem reward fund (non-immediately circulating): 300 million

Final snapshot date: January 30, 2026

Reference price: $0.20 USD

This series of adjustments demonstrates Jupiter’s maturing and cautious approach to tokenomics. Large-scale free airdrops can generate marketing buzz but often come with the “money-spraying peak” curse, where recipients tend to immediately cash out, causing initial price pressure and damaging long-term holder confidence. By significantly reducing the size of the one-time airdrop and locking more tokens into long-term incentives and development funds, Jupiter aims to create a more sustainable token release curve. While this may temporarily dampen some market enthusiasm, in the long run it helps establish a healthier market structure with less sell pressure, laying a foundation for steady price discovery. The snapshot date on January 30, with a reference price of $0.20, provides clear market expectations.

Industry Leaders Debate: After Buyback Failure, Where Should Funds Flow?

Jupiter’s strategic pivot has quickly sparked high-level debate within the crypto industry about “the best use of project funds.” Influential founders, investors, and researchers have voiced their opinions, reaching beyond individual projects to touch on deeper issues of decentralized governance and token economic design.

Solana co-founder Anatoly Yakovenko proposed a constructive alternative: instead of directly buyback and burn tokens, protocol profits could be stored as “protocol assets with future claim rights.” He suggests allowing users to lock and stake tokens for a year to earn a share of these assets. As the protocol’s balance sheet grows, stakers would receive larger rewards. This approach effectively converts protocol profits into dividends for long-term stakers, aligning holder interests with protocol treasury growth, and incentivizing long-term holding rather than short-term trading.

Kyle Samani, co-founder of Multicoin Capital, agrees with Yakovenko’s core idea—reward long-term holders—but emphasizes that mechanisms need further optimization. He notes that traditional stock markets also don’t perfectly solve the problem of rewarding long-term investors, and crypto-native teams should explore innovative mechanisms to distribute “excess value” to steadfast supporters. Jordi Alexander, founder of Selini Capital, suggests a more refined, rule-based buyback scheme: dynamically adjusting buyback amounts based on token price relative to intrinsic value—buying more when prices are below intrinsic value to reduce supply effectively, and slowing down when prices are overheated or overvalued. Such counter-cyclical, rule-based operations are more flexible than fixed-percentage buybacks.

Solana influencer fabiano.sol cuts to the core: he argues that buyback failure stems from “people currently have no reason to hold JUP.” He proposes a clear logical sequence: first, create strong reasons for holders (governance rights, fee discounts, staking yields, etc.); only after establishing this foundation can buyback and burn serve as an effective deflationary mechanism. He even calculated that if the current quarterly buyback of about $10 million USD were instead allocated to staking rewards, at current prices, it could generate up to approximately 25% annualized yield, providing a powerful reason to hold. This debate clearly shows the industry’s focus shifting from “whether to buyback” to “how to build a multi-layered value support system.”

Whales’ Bets and Market Response: Signal of a Turnaround?

Shortly after Jupiter’s team publicly reflected on buyback strategies and the industry engaged in debate, on-chain data captured an intriguing market move. According to Hyperinsight, a new whale address (0x7110…) deposited about $5.5 million USD as margin on the derivatives platform Hyperliquid, then simultaneously opened leveraged long positions on Bitcoin, SOL, AAVE, and JUP, with a total position size of $12.03 million USD.

Notably, the whale’s opening of a 3x JUP long position occurred immediately after the “Jupiter co-founder considers halting buybacks” news broke. This appears to be a contrarian bet: the whale may believe that the project’s acknowledgment of issues and strategic adjustments mark a maturing, pragmatic phase. Moving cash flows from inefficient buybacks into product, incentives, and ecosystem development could, in the long run, support the project’s health and ultimately bolster JUP’s value. This operation resembles traditional stock market logic of investing in “turnaround” companies.

Whale Position Details and Risk Analysis

Total margin: approx. $5.5 million USD

Total position size: $12.03 million USD

3x BTC long: $8.91 million, average entry $91,000, liquidation at $62,000

3x SOL long: $1.26 million, average entry $134.4, liquidation at $90.58

3x JUP long: $1.15 million, average entry $0.212, liquidation at $0.148

3x AAVE long: $720,000, average entry $164.2, liquidation at $116.1

This whale’s position mix reflects a macro outlook: it’s betting on Jupiter’s strategic shift while also leveraging long positions on Bitcoin and Solana, indicating a bullish view on the broader crypto market and Solana ecosystem. However, high leverage entails high risk; the JUP long’s liquidation price at $0.148 leaves about 28% downside room from current levels, providing some buffer against short-term volatility but not without risk. Market watchers will closely observe whether this “smart money” bet signals a shift in sentiment and recognition of Jupiter’s new strategy.

What is Jupiter Exchange?

For readers unfamiliar with the Solana ecosystem, understanding this event requires knowing Jupiter’s position. Jupiter Exchange is a leading decentralized exchange (DEX) aggregator on Solana. It is not an independent exchange but a smart routing platform. When users want to swap tokens, Jupiter scans liquidity pools across major Solana DEXs (like Raydium, Orca, Serum) to find the best prices, lowest slippage, and lowest fees, then executes the trade with a single click.

JUP, as its governance and utility token, was designed to capture platform value. Its core mechanisms include: protocol allocating part of trading fee revenue for buybacks and burns (currently under reevaluation), token holders participating in governance votes on platform development, and potential future fee discounts. However, as this event reveals, the effectiveness of its value capture depends heavily on actual demand and usage of the token. Currently, Jupiter faces the challenge of converting its large user base (one of Solana’s most used DeFi apps) into tangible demand for JUP. This strategic review is a key attempt to break through that bottleneck.

The Evolution of Token Economics in Crypto Projects: Lessons from Jupiter

Jupiter’s current predicament is not unique; it exemplifies many projects attempting to develop sustainable tokenomics in DeFi. Early models were often simple and aggressive—emphasizing deflation (burns) and scarcity narratives. But as markets matured, participants realized that “deflation” without practical utility is like water without source.

The trend now is toward more complex, nuanced models centered on core principles:

1. Value Creation First: Tokens must be deeply tied to core value-adding activities—paying for services, serving as collateral, or unlocking exclusive features.
2. Aligned Incentives: Distribution and incentives should precisely align with desired user behaviors (long-term staking, liquidity provision, governance participation), not just “airdrop for all.”
3. Capital Efficiency: Protocol treasury funds should be used judiciously to maximize growth leverage or user value, avoiding mechanical rule-based spending.
4. Community-Driven Dynamic Adjustments: Token models should be adaptable, evolving based on market feedback and protocol development stages—like Jupiter’s ongoing governance discussions.

Jupiter’s recent adjustments to buyback and airdrop strategies exemplify this evolution. They mark a shift from “design and deploy” to “operate and iterate,” reflecting a maturing approach. This strategic introspection within a leading Solana project offers valuable lessons for the entire industry’s tokenomics design. The ultimate outcomes will be closely watched.