PANews reported on March 7 that according to The Block, Andrew Thurman, a contributor to the Jito Foundation, proposed a simulation of a new model for the JTO token economics on Thursday, which includes a potential token repurchase plan. The 12-page proposal he prepared is intended to trigger an in-depth discussion on how to expand the utility of Jito governance tokens (it should be noted that this proposal is informal and does not represent the official position of the Jito Foundation, JitoDAO or other relevant parties). Thurman pointed out that as Solana usage grows, the revenue of the protocol and DAO is also increasing. He believes that the community should think about how to best use these revenues rather than just increase the size of the treasury. Although many protocols face a choice between reinvesting in ecosystem growth and distributing it to participants through rewards, Jito can explore a "recycling and rewards" strategy. He believes that at the application and infrastructure level, value recovery (reinvesting in ecosystem growth) and value rewards (redistributing or compensating ecosystem participants) are all new design areas, and how to best achieve these two goals remains to be resolved.
In terms of “value recovery,” Thurman sees two main options: buybacks or flipping a fee switch. Both of these methods are designed to return value to users in a relatively straightforward way. Although the fee switch mechanism is sometimes controversial, it is a simple mechanism to reward value to token holders. Thurman mentioned some running examples such as GMX and Synthetix, but he believes that there are not many crypto projects that have successfully redistributed value through fee switches. In contrast, buybacks have become a popular method for rewarding ecosystem participants, which may be influenced to some extent by the success of buybacks in traditional market mechanisms. However, Thurman pointed out that there is currently no risk-free model or “clear blueprint for success” to reward the community through buybacks. To this end, he proposed two possible “new types of reinvestment” models: “buyback and barter” and “real yield indicators.”
In the buyback and barter model, Jito DAO will use a certain percentage of the fees it earns to "barter" with the DAO of another project in exchange for favorable conditions, and in this way achieve long-term cooperation. Thurman believes that the benefit of this proposal is to remove JTO from the open market and "soft lock" the token, thereby avoiding the use of tokens from the Jito DAO treasury to increase the circulating supply. But he also pointed out that the proposal has counterparty risk.
