Abstract
JIP-24 proposes a new fee structure for the DAO, in which the entirety of fee flows from the Block Engine and future fees from the newly launched BAM (Block Assembly Marketplace) are combined and routed to the DAO treasury.
Since the passing of JIP-8, there has been a total 6% fee on Jito Block Engine rewards, split 3% to Jito Labs and 3% to Jito DAO. Following this proposal the full 6% of fees will be routed to the DAO treasury in perpetuity.
JIP-24 additionally earmarks these flows primarily to the value accrual mechanisms being created by The CSD (cryptoeconomics subDAO), created in JIP-17.
This proposal reflects the commitment of the Jito ecosystem to ensure that protocol fees accrue directly to the token holders as optimally as possible and cements the DAO as central to the technical and economic governance of the Jito Network.
Motivation
This JIP brings the Jito Network further into value alignment with the JTO token at the focal point of network-wide value accrual. It tightens the Labs/DAO relationship more closely in line with emerging industry standard practices, where on-chain value maximally accrues to tokens.
Additionally, the launch of the Block Assembly Marketplace (BAM) is a landmark moment, not only for the Jito Network but for all of Solana. It opens up a new design space for blockspace and opens up new revenue lines for the DAO.
BAM blockspace innovation will be structured around “Plugins”, which are value accretive mechanisms that plug in to BAM nodes and augment transaction sequencing logic. It is anticipated that these will be a new value source for Jito DAO.
As BAM rolls out and progressively captures network stake, the existing network economics will evolve. The DAO will take a role alongside other transitionary governance structures, of stewarding the rollout of BAM and ensuring the plugin governance evolves towards maximal value accrual for the token economy.
Jito DAO will receive fees generated by both BAM and the Jito Block Engine and will earmark them primarily for future value accrual activities, leveraging the mechanisms that will be created throughout the year by The CSD.
Key Terms
- BAM (Block Assembly Marketplace): The new proposed Solana block-building architecture that brings verifiability, privacy, and programmability to Solana’s transaction pipeline and supports “plugins” that extend sequencing logic.
- Block Engine Fees: the fees (e.g., bundle/tip revenue) generated by Jito’s Block Engine. Currently, 3% to the DAO and 3% to Jito Labs.
- DAO Treasury / Realms Treasury: The on-chain treasury controlled by JTO Tokenholder governance.
- The CSD (Cryptoeconomics SubDAO): The subDAO tasked with designing and executing value-accrual mechanisms; this JIP earmarks BAM/Block Engine fees for CSD-directed programs.
- Revenue Routing Transaction (RRT): The on-chain or programmatic change that re-points fee destinations to the DAO Treasury.
- Jito Labs Fees: the share of fees previously earned by Jito Labs (3% of Block of Engine Fees).
Specification
- Fee Sources to Route:
- The Jito Labs share of Block Engine fees (tips/bundles/etc.) not already routed to the DAO.
- Jito Network’s BAM fees (including plugin-related revenue).
- Destination:
- Route above fees to the DAO Treasury address.
- Implementation Steps:
- Jito Labs / Foundation executes an RRT (or equivalent config change) to update fee receivers.
- Administrator posts confirmation TXs and updated addresses on the forum.
- CSD proposes its first budget to deploy these funds into value-accrual mechanisms.
- Consensual Record:
- This JIP will represent token holder consent and mandate on this fee structure and its utilisation for value accrual. Any future change to fee routing or earmarks requires a standard JIP and Tokenholder Vote.
- Transparency & Reporting:
- New dashboards for BAM fees and updated dashboards for DAO revenue.
- Annual reports to the DAO on BAM economics and fee utilisation.
Benefits / Risks
| Benefits | Risks / Mitigations |
|---|---|
| New Revenue Streams: BAM plugins + marketplace fees expand DAO income beyond Block Engine by approx $15m annually. | Accounting Complexity: Multiple fee sources require robust tracking. Mitigated by dashboard creation. |
| Direct Value Accrual: Earmarking to CSD ensures fees fund tokenholder-facing mechanisms. | Value Accrual Mechanisms Ineffective: Committing to pure value accrual may be an ineffective utilisation of capital. The CSD to ensure market leading capital efficient mechanisms are used. |
| Aligns Incentives: Reinforces DAO’s role at the center of technical & economic governance. | Execution Risk: Delays in re-pointing fees. Mitigated by clear implementation steps & public TX proofs. |
| Future-Facing: Establishes the DAO treasury as the recipient of future BAM fees as they are generated. |
Outcomes
- Immediate: Fee receivers updated; DAO Treasury begins accumulating BAM + Block Engine fees. Jito Labs share of Block Engine fees move to the DAO.
- Short Term (1–2 quarters): CSD launches initial value-accrual programs funded by these flows.
- Long Term: Sustainable, transparent revenue engine solidifies JTO holders’ economic stake in protocol growth.
Cost Summary
- Direct Costs: None—fee routing is a configuration/transaction change.
Ongoing Ops: Minimal administrative overhead for reporting (absorbed by Foundation). - Value Accrual Budgets: Funded from the earmarked fee stream, subject to Tokenholder approval.