JIP-34: Liquidity and Incentive Budget
Category:
Treasury
Abstract
This proposal establishes a discretionary liquidity and incentive budget of 20 million JTO, replacing the prior annual cadence with a standing, performance-bounded allocation. The budget will be managed under delegated authority to enable timely execution of liquidity strategies, strategic partnerships, and ecosystem integrations that advance JitoSOL adoption and protocol resilience.
This proposal builds directly on the outcomes of JIP-2 and JIP-13, under which the DAO authorized liquidity mining budgets that were materially underspent, empirically evaluated, and largely returned to the treasury after disciplined deployment. Based on demonstrated capital restraint and positive outcomes, this proposal increases flexibility while maintaining strong governance guardrails.
In parallel, this proposal signals an evolution in liquidity strategy: reducing reliance on inflationary liquidity mining over time and exploring protocol-owned liquidity (POL) using DAO treasury reserves, in coordination with the Cryptoeconomics SubDAO (CSD).
Motivation
JitoSOL continues to operate in an increasingly competitive environment for liquid staking assets, with growing participation from centralized exchange-issued LSTs and new DeFi integrations. Maintaining liquidity depth, DeFi composability, and strategic distribution remains critical to preserving JitoSOL’s role in the Solana ecosystem.
At the same time, experience from 2024 indicates that:
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Not all liquidity must be rented via inflationary incentives
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Certain incentive mechanisms produce higher long-term retention than others
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Strategic partnerships and integrations often require speed, discretion, and flexibility that rigid annual budgeting does not support
This proposal is motivated by the need to bake in what has worked, while creating room to experiment with structurally more sustainable liquidity approaches, including a sufficient budget to facilitate deals of the scale articulated in JIP-33
Under JIP-2, the DAO authorized 7.5 million JTO for liquidity mining and incentive programs. As of the end of 2024:
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Approximately 1.43 million JTO was distributed to active incentive programs
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Approximately 6.07 million JTO of the JIP-2 allocation was returned to the DAO treasury
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Total returned JTO (including residual pre-JIP grants) was approximately 6.3 million JTO
JIP-13 provided a retrospective analysis of this activity and demonstrated that:
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Incentive spend was modest relative to authorization.
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Incentivized strategies showed persistent effects beyond incentive periods.
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Delegated execution enabled adaptive capital allocation.
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Spending was paused at the time out of the annual budget authority.
Spend Since JIP-13
The following charts (see, figures 1 and 2) overview JTO deployment since JIP-13 execution to date. This record establishes that prior liquidity budgets were not fully deployed by default, but instead managed conservatively and adjusted based on empirical performance.
Figure 1: JTO Deployment Vs Authorised Spend Cap.
Figure 2: Capital allocation across protocols and categories.
Specification
1. Establish a Standing Liquidity and Incentive Budget
The DAO approves a 20 million JTO liquidity and incentive budget, to be drawn from the DAO treasury and managed on a discretionary basis.
This allocation:
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Replaces the prior annual cadence with a standing authorization
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Is not a target spend, but a spend cap.
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May be deployed gradually, or partially based on opportunity and performance
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Will top up the remaining liquidity mining budget remaining from the 2025 iteration, to 20m JTO (roughly 10.6m JTO).
2. Delegated Authority and Execution
Authority over this budget is delegated to the existing structure utilised since JIP-2, with the mandate to:
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Execute liquidity and incentive strategies
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Enter into strategic partnerships and integrations
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Adjust or terminate programs based on observed performance
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Respond to competitive or market developments without governance delay.
This delegation reflects the operational model previously approved under JIP-2 and validated by outcomes reviewed in JIP-13.
3. Evolution Away from Pure Inflationary Liquidity Mining
The DAO signals an intent to progressively reduce reliance on inflationary liquidity mining, where appropriate, in favor of more durable liquidity strategies.
Specifically:
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Inflationary incentives will continue to be used selectively where empirical evidence supports them
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New incentive programs should prioritize persistence, retention, and strategic value, not peak TVL alone and to build new strategies that will incentivise JitoSOL TVL growth.
4. Exploration of Protocol-Owned Liquidity (POL) via the CSD
This proposal authorizes the Cryptoeconomics SubDAO (CSD) to explore, design, and evaluate mechanisms for protocol-owned liquidity using DAO treasury assets.
This exploration may include:
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POL structures that reduce long-term incentive spend
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Risk-managed deployment of CSD treasury assets to support core JitoSOL liquidity, with a view to building more substantial strategies that will come back for a full JIP.
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Comparative analysis between rented liquidity and owned liquidity
Any material deployment of treasury assets for POL will be subject to separate governance approval, informed by CSD research and recommendations.
6. Governance and Oversight
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All spending from the budget will be tracked and reported publicly at the typical annual cadence, using this thread.
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The DAO retains the right to amend, reduce, or revoke the budget through governance
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Periodic updates on liquidity strategy effectiveness will be provided
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The next anticipated Liquidity and Incentive proposal JIP, will be to request a new spend cap once this allocation has been fully deployed, rather than on an arbitrary annual cadence.
Benefits and Risks
Benefits
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Sustains JitoSOL liquidity depth and DeFi composability
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Enables timely execution of high-impact partnerships
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Reduces long-term reliance on inflationary incentives
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Introduces a path toward more sustainable, treasury-backed liquidity
Risks
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Misallocation of incentives to low-impact strategies
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Opportunity cost of treasury capital used for POL
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Changing market conditions reducing incentive effectiveness
These risks are mitigated by demonstrated budget discipline, delegated execution, and explicit DAO oversight.
Cost Summary
This proposal authorizes a spending cap of up to 20 million JTO from the DAO treasury, until it is fully deployed.
JIP-34 Vote is now live, vote on Realms: JIP-34: Liquidity and Incentive Budget | Jito