JUP, the native token of swap aggregation engine Jupiter, has experienced a massive sell-off in the last 24 hours following the Solana airdrop on Wednesday, January 31. According to data at the time of writing, JUP coin is trading at just under $0.60, down 70 percent. So, why did the altcoin fall? A response to the decline came from the project founder.
JUP coin price first soared, then crashed
Shortly after the airdrop, the JUP price rose to $1.27, according to CoinMarketCap data. Additionally, initial bids stood at around $0.41, meaning the JUP price tripled in a short period of time, increasing its market cap to a staggering 1.72 billion at its peak. However, the JUP price has since corrected by 60%, sending trading volume skyrocketing to $1.2 billion. In a recent announcement by the Airdrop Authority, details regarding the Jupiter token and its upcoming airdrop were shared. Here are the key highlights:
- The total supply of Jupiter tokens stands at an impressive 10 billion.
- A significant number of 955,000 wallets that connected to Jupiter before November 2 are eligible to participate in the airdrop.
- The distribution plan includes strategic allocation of 40% of the total token supply across four rounds of airdrops. The first round, where distribution is planned to begin, covers 10% of the total supply, equivalent to 1 billion tokens.
Criticism came to Jupiter token sale strategy
Meanwhile, the token sale process raised some questions and criticism from the crypto community, as the Jupiter team sold a large amount of JUP tokens on the listing day, causing the price to drop significantly. According to CoinMarketCap, JUP reached an all-time high of $2.04 on January 31, 2024, but fell to an all-time low of $0.6213 on the same day, a decline of nearly 70%.
In response to the controversy, Jupiter co-founder Meow said: [Twitter hesabında] He explained the logic behind his token sale strategy by publishing a series of tweets. He said that the team only sold 250 million JUP tokens, which is 2.5% of the total supply, and that they could raise more funds using other methods such as Initial DEX Offering (IDO) or Over-the-Counter (OTC) trading. He also said the following:
Hello everyone, I received advice on discord to be even more clear, so let me put it simply: If I did an OTC deal or a regular IDO, we would get a similar amount, if not more, without the confusion and absolutely zero risk that comes with pioneering new concepts .
If it falls below $0.4, the team will receive nothing
Meow claimed that the team chose this approach to create a fair and transparent market dynamic that benefits both airdrop recipients and potential buyers. He said that by selling a large amount of JUP tokens at a high price, the team created a large liquidity pool that could absorb the selling pressure from airdrop recipients, who received 50% of the total supply for free. He also said that this way buyers have assurance that there is a large pool that will support the price and prevent it from falling too much.
Meow admitted that the team runs the risk of having zero certainty about how much they will actually get, as the community and those experiencing buyer’s remorse may sell their JUP tokens before the team does. He said that if the selling pressure from airdrops is too great and there is not enough or no demand and the price drops below 0.4 USD, the team will receive nothing. In his blog post, he said that the project’s team was investigating the factors that caused the token price to drop.
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