JIP-17: Activate a Cryptoeconomics subDAO

JIP-17: Activate a Cryptoeconomics subDAO (The CSD)

Category: Treasury

Abstract

This proposal outlines an approach to realising a number of desired outcomes that have surfaced through the open discussions on the forum in response to the Jito Tokenomics Research Paper as well as during the Jito Tokenomics Roundtables (Part One, Part Two). It is clear that value accrual in the Jito token economy is complex and requires both technical and strategic decision making and coherent action to achieve maximum optimisation.

JIP-17 proposes to fund a Cryptoeconomics subDAO (the CSD), which will be controlled and governed by third party experts in the field with the mandate to activate a multi-threaded work stream and funded by a sub-treasury, authorized by this JIP. The subDAO will aim to transition the DAO towards a ā€œmulti-mechanismā€ approach to governing its token economy and connecting the economic bandwidth captured by the DAO to the JTO token.

Motivation

Jito DAO generates significant REV (Real Economic Value), with recent data indicating that the DAO is set to accrue roughly $30m in JitoSOL on an annual basis. However, the DAO in its current state does not have the ability to activate this capital in a meaningful way that will both advance the growth of the Jito Network and ensure that JTO accrues value optimally, including, but not limited to three tokenomic functions: buybacks, yield subsidy, and fee switch vaults.

The Cryptoeconomics subDAO, will have the mandate and a treasury to activate these goals, through the coordination of expertise, the formulation of a data-informed strategy and the creation of technological mechanisms. It seeks a broad mandate to facilitate the exploration and execution of a range of possible mechanisms and approaches, and to test them out in the market by using DAO funds. Once effective cryptoeconomic primitives have been discovered, it will aim to enshrine the control of them into the core on-chain DAO governance mechanism via existing, or novel, governance tooling.

The motivation for JIP-17 should be considered of reasonable urgency. Although sitting predominantly in JitoSOL (and therefore implicitly value accretive), un-activated Jito DAO REV that could be used for value accrual and network growth bears considerable opportunity cost. The lack of mechanisms and coherent strategic approaches for activating this capital represents inefficiencies in the Jito ā€˜economic engine’ and capital activation approaches should be spun up as quickly as possible.

Specification

JIP-17 seeks a mandate to assign full autonomous spend authority of the following amounts from the Realms treasury to a subDAO structure, with the encouragement to spend the amounts over a period of 12-months. The amounts are:

  • $7.5m in JitoSOL (for building and buy backs)
  • 5m JTO (for incentive engineering and market incentives)

The composition of the subDAO will be as follows:

  • A set of decision makers, who will sit on a 4/6 multi-sig and have ultimate decision making authority on spend and transaction type. The m-of-n quorum will be used to settle consensus decisions in monthly synchronous decision making sessions.

  • A set of experts, including researchers, mechanism designers, technologists and token economists, who will build and inform the core knowledge base of the subDAO. This group will be pro-actively curated and iterated throughout the subDAO term.

  • A set of builders who will complete the work and ship the code.

  • A lead facilitator, who will support all parties as much as required and facilitate coordination towards aims, outcomes and target metrics.

  • The subDAO should be considered autonomous, and thus self-governing and so will have the ability to build novel incentive structures and governance mechanisms that will influence future Jito DAO structures of a similar nature in the future.

  • The subDAO will operate under a ā€˜conclave’-like decision making system, with monthly synchronization events where decisions are presented, discussed and executed, with no exit until consensus is reached. No information will be revealed to the market, or externally to the decision makers until transactions are executed.

The Members of the subDAO will be:

  1. Decision Maker 1: Nick Almond (Facilitator) - Head of Governance, Jito Foundation
  2. Decision Maker 2: Paul Dylan-Ennis - University College Dublin
  3. Decision Maker 3: Wassim Alsindi - 0xSalon, MIT Cryptoeconomic Systems
  4. Decision Maker 4: Kollan House - Co-Founder MetaDAO
  5. Decision Maker 5: Othman Gbadamassi - Chainflow
  6. Decision Maker 6: Ian Unsworth - Kairos Research

Aims, Outcomes and Target Metrics

Aims:

Over the next 12 months the Cryptoeconomics subDAO will aim to:

  • Design and architect a range of Jito token economy focussed mechanisms that will drive growth of the Jito Network and value accrual into the JTO token.

  • Commission and oversee the build of these mechanisms ensuring the highest possible quality, security and market impact on a rapid delivery schedule.

  • Generate an expert consensus on the optimal approach for Jito’s cryptoeconomics and put this theory into practice in the form of actionable mechanisms and market strategy.

Outcomes

In order to be considered a success the Cryptoeconomics subDAO will need to achieve the following:

The delivery of at least 2 (ideally more) divergent approaches to Jito token economy governance and value accrual, these should draw from the following:

  • An approach to ā€˜smart buy backs’
  • JTO or JitoSOL auction mechanisms
  • Mechanisms or approaches for enhancing JTO and / or JitoSOL liquidity
  • A DAO-to-DAO approach that enhances the network effects of JTO and / or JitoSOL
  • A Jito economy data and analytics system / oracle design
  • A JitoSOL / JTO yield augmentation mechanism
  • A fee switch vault mechanism

Metrics

Optimisation Metrics:

  • JTO as a percentage of the SOL market cap.
  • JitoSOL and JTO trading depth in AMMs, up to sensible thresholds.
  • New JTO and JitoSOL markets, including pools, venues and integrations.
  • Execution speed.
  • Minimal build spend, with a maximum of 20% of JitoSOL allocated to build.

The subDAO will be judged on these metrics by the end of its 12 month term, implying that these mechanisms should be put into active practice ASAP. The subDAO is empowered to execute with speed and agility and will execute any mechanisms and systems it generates throughout its term in order to test their efficacy, with a goal of DAO level integration by the end of its term.

Finally, the subDAO will be expected to return accumulated and/or unspent assets to the core Jito DAO at the end of the 12 month period.

Reporting

The subDAO will be left to its own devices to work and ship the desired outcomes, but will be expected to publish a full and comprehensive report to the DAO each quarter to show its progress and reveal receipts of its spending.

Every substantial decision is reported back to the DAO forum, a decision being transactions signed.

The subDAOs main requirements to the DAO are to ship positive and material outcomes in the economy.

Risks

  • The subDAO is ineffective, or incompetent and money is misspent or wasted.

    • Jito DAO is transitioning spend authority to this group. Since there is no trustless mechanism available for guaranteed return of assets to the DAO, the Jito DAO should consider these assets potentially marked to zero, with no chance of being returned directly to the main treasury. The DAO should consider the JIP-17 transaction as going ā€œon-riskā€ with the subDAO and consider JIP-17 a bet on the ability of the initial participants to deliver on the aims and outcomes outlined in this proposal.
  • The multi-sig signers collude and defect with the treasury.

    • It is possible, however at least 4 of the signing set would need to successfully collude with a pay off profile of 1/4 of the subDAO treasury. It is likely that the permanent reputational damage to the participants would be enough to hold this trust model together. However, a simple whistleblowing and bounty system will be formulated to lower the probability of defection amongst the singing set.
  • The subDAO overspends on experts and / or contributors.

    • Given the urgency of the issue, this is a more desirable state than inaction. Inertia is more costly than overspend. However, any egregious spending habits will become evident as the subDAO produces its receipts at quarterly reporting thresholds (at a minimum). The subDAO will still be in sovereign control of the funds, but the DAO will be able to persuade them to change direction at the social layer.
  • The subDAO creates sell pressure on JTO.

    • JTO will not be sold to fund subDAO building activities, but will be activated to have materially positive effects on the token economy, which can include performance-based long term incentive alignment with key stakeholders. Jito DAO generates REV in the form of JitoSOL, it is these assets that will be utilised for funding TSD activities.
  • subDAO members disengage, fail to make decisions, or self-deal.

    • subDAO members will be incentivized to make optimal decisions. A maximum of one foundation member will act as a minority decision maker and facilitator and will recuse themselves from any incentives or payment to act in a decision making capacity. Decision makers are explicitly separate from experts and builders and will not pay themselves to do anything other than make decisions.

The composition of the group is of paramount importance, since they will have full execution authority over the treasury and the subDAOs action. A diverse set of members are invited to present themselves on the forum whilst JIP-17 is in draft phase and suitable members will be vetted and added. Once the full decision maker composition is achieved, a request for formal escalation to official status will be made and the two week countdown to vote execution will take place as per standard Jito constitution norms.

Jito DAO members are invited to rigorously evaluate the proposal in the draft cycle and leave their comments on the forum; escalation to official status can be requested at any time. The creator of the proposal has authorial sovereignty on the proposal and thus final editing rights. Forks of JIP-17 can be made in the drafts section if desired.

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I support JIP-17 and am committed to bringing Kairos’ expertise in cryptoeconomic design to this subDAO. Unlocking the DAO’s idle capital is critical, and doing so demands experimentation backed by robust research and real-time data. I’m aligned with the urgency and believe this structure will let us deploy, measure, and iterate at the speed needed to bolster JTO’s economic value accrual. Looking forward to collaborating with the other members to deliver tangible primitives and clear reporting back to the community. Let’s get to work!

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Hey guys. I support this subDao going forward with credible and knowledgeable team members.

Ideally, i prefer the members in the subDAO to personally own JTO. I understand they will be rewarded based on certain performance based metrics?

But if any members don’t presently own JTO (ideally bought out of their own pocket), can we truly say they are 100% aligned?

Because besides the upside, members should also feel the pain of the downside if tokenomics is not working / token price goes down or if any team members are inactive and thus, there are both push/pull factors and urgency to optimize and maximize tokenomics for JTO holders asap.

Skin in the game with both upside and downside is important to ensure commitment and alignment. Will there be any transparency on this?

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A 2nd post here. It’s not directly related to the topic of subDao but since this is the latest forum post related to tokenomics, i thought about highlighting further feedback here.

I have read the token transparency report by Blockworks on Jito and i highly applaud team :saluting_face: for their high score. I however note that the report is scoring based on transparency rather than the quality of the tokenomics. Link: https://impressive-horses-5641a8b530.media.strapiapp.com/Jito_Token_Transparency_Framework_Q2_2025_0ed61abad5.pdf

  1. Basically, the report have confirmed that Jito does indeed have equity, in addition to token. If equity holders demand return on equity, will this not surely divert part of revenue flows meant for token holders away from them? Because equity holders likely hold very big JTO position as well at much lower valuation compared to JTO holders who bought in the open market, equity holders gets to eat the cake and still keep it.

  2. Qns on transparency: Was part of the 5% mev tips (now 3%) allocated to labs, meant to return to equity holders? Even if it’s no up to this point, will this be in future plan to do so?

  3. Jito labs is allocated 245,000,000 JTO (even more than jito dao which controls 243,000,000 JTO) and get 3% of mev tips currently. Jito foundation also paid jito labs $2.6m. Prior to tiprouter, jito’s cumulative 5% mev tips received should be at least $35m especially when mev volume was at ATH in Jan 25? And with a lean team of not more than 20 employees, not sure why $2.6m is still needed to pay labs from foundation? Could this $2.6m fees not be used to return some value back to JTO holders especially when jito was doing so well then?
    Let me know if i got any figures wrong.

  4. If it make sense, why can’t the foundation and labs combine as 1 entity? On the outside, they seems like one and the same team with 100% aligned objectives and interest. Jito foundation also have 250,000,000 JTO allocated to them which they can use at their own discretion. Could they not share resources as a combined entity? @samandrewNIV also posted similar views here: JTO Utility And Tokenomics - #13 by samandrewNIV

  5. If it make sense, can all 6% of mev tips goes to DAO instead? If assuming tips is shared as ā€œdividendsā€ based on JTO staked, revenue flowing to jito labs/foundation via this approach for covering some expenses/salary would be non trivial given the combined JTO that labs and foundation holds.

I think this would be better optics for tokenomics too. Data analytics site like defillama define ā€œrevenueā€ as ā€œFee accured to the jito DAO (Withdrawal Fees, Interceptor Fees, Tip Router Fees)ā€ and ā€œHolders Revenueā€ as ā€œFee paid to token holdersā€
https://defillama.com/protocol/jito?revenue=true

With higher fees to dao as a result, this would surely increase fundamental valuation metrics of JTO and a win win for all. Imo, the alignment of interests still have room to improve.

Hope this can be discussed publicly by subDao/Jito team with the wider community soon.

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Thanks for the comments Sol

Some of the participants are JTO holders, but not all. I feel like this would limit us to a very small subset of people who could take these roles and it’s challenging to find high quality, high integrity experienced people who can do it.

You are absolutely right about incentive alignment though, we want to create a structure where participants are rewarded at the back end (end of subDAO term) based on performance, receiving no JTO if they don’t achieve the goals and a structured amount if they perform on all metrics. Incentive alignment can be baked into the governance of these things. Our goal is to first keep the attention of the decision makers making sure they synchronise, and then have them maximally incentivised to perform. We have some interesting ideas on this that will become apparent at the first reporting waypoint for the subDAO.

Skin in the game is important and if they are showing up, or not performing, they will be rotated out of the set. I’m comfortable we have a good structure for this.

Your broader questions are good ones and we need to find a place for them on the forum here for more generalised questions and feedback. But here’s some general, ā€œunofficialā€ thoughts.

We are pushing the boundaries of transparency and leadership in the space with the quality of our reporting and have open packages of work there that will continue to provide good information to all parties.

Things like the equity-token tension is essentially a ubiquitous question in the industry that everyone needs to find a way to get clear on, us included. I believe there is ongoing conversations about this that should provide more clarity in the future, but as you can imagine they’re complex legal questions that are at the frontier of what’s going on in the industry.

There are indeed broader conversations in the industry about things like merging foundation and labs entities. I think it’s about finding what’s right for each project, but broadly I do think foundations got overly bloated and drifted from their ā€œDAO wrapperā€ intent. I actually think that this is one of the projects where the Labs / Foundation distinction works, since the Labs entity is a tight and high performing engineering entity and can focus on that.

It’s broadly working very well here across the board and we don’t want to do anything too radical at the moment, but I do think these are questions and issues that will develop over time as the broader industry shifts in structural make up.

I’ll see if I can find away to open up this conversation on the forum, without it being buried in the threads of specific JIPs.

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Thanks nick! Always thoughtful and fast to respond.

Tbh, i hv no issue on subdao team member with your clarification. My next main concern will be the speed of implementation. And also wary of going overly technical and complicated that market might not appreciate or understand.

Just look at hyperliquid. Their token accrual mechanism is so straightforward and obviously the market approve of it. Pump.fun is rumored to be planning 25% revenue share with token holders. No complex formula etc. Simplicity and speed can be bullish. I hope subDao can be conscious of this and achieve a balance on this.

As for the equity-token tension, i think its straightforward. If revenue are finite and there are equity and token holders both demanding share of revenue, either party will end up get less of share VS there is only 1 central party.

In the wake of morpho announcing in no uncertain terms they are only making their token the central focus of value accrual/no dilution by equity holders, market was unanimous in their praise for their approach. Just see all the retweets/comments.

Jito’s equity holders collectively 16% of all tokens. Core contributors holds 24.3%. Even without any returns from equity side, i would argue they will get just as much value if not more from token side (value flows only to token + token appreciate greatly in price). Everyone still wins. Rather than 1 party wins more at the expense of another or both parties net lose together.

I hope that the team can make a public stand on this. Make it clear. This will surely create a lot of goodwill and change in investors’ sentiment on JTO (not the team, but the token), on top of impending change in tokenomics. However, even if we implement all kinds of complicated designs on tokenomics but if Jito team doesn’t make a clear stand on this, it will always be a stain there because market are not stupid and knows there are still dilution from equity going on in the background at the expense of pure JTO holders (and especially those who bought in the open market).

There are some things team can just decisively do without annoying delay/lag that comes with governance discussion/voting. Markets moves very fast and don’t wait for slow moving protocols.

Finally, hope to see more news/long term vision on how Jito plans to grow/diversify their revenue in the wake of competition within/outside of Solana ecosystem. This is also critical, above and beyond tokenomics. No tokenomics will help JTO if revenue is stagnant or declining.

Please give market reasons to buy and hold JTO instead of selling upon unlocks/shorting it. The market seems to be turning around now and i hope this time, JTO can run alongside with it to the top.

Cheers everyone and thanks for your patience on my feedback.

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Hello Nick and the wider Jito community,

Over the past few weeks it’s been encouraging to watch the DAOs steady progress. I’m confident Jito can continue to re-think incentive and revenue models to expand REV, especially as traditional-finance institutions accelerate their move onto blockchain rails.

I’ll be following future updates closely, engaging where possible and am ready to contribute when the right opportunities arise.

Thank you for the ongoing work.

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