JIP-37: Extend BAM Subsidy at Full Rate and Mandate Q3 Value Accrual

[drnick]

JIP-37: Extend BAM Subsidy at Full Rate and Mandate Q3 Value Accrual

Category: Protocol

Proposal Type: Programme Modification (JIP-31, JIP-17)

Status: OFFICIAL

Abstract

This JIP modifies the BAM Early Adopter Subsidy Programme (JIP-31) to maintain 100% protocol revenue allocation to the subsidy pool through the entirety of Q3 2026, replacing the linear wind-down currently scheduled to begin in July. The programme will end with a hard cutoff at the close of Q3 (September 30th, 2026), after which 100% of protocol revenue returns to value accrual.

To offset the extended diversion of protocol revenue, this JIP mandates the Cryptoeconomics subDAO (CSD) to deploy its treasury reserves to execute value accrual buybacks at par — matching 100% of protocol revenue throughout Q3. This ensures Tokenholders receive uninterrupted value accrual during the final phase of the subsidy programme, funded from the CSD’s existing treasury allocation rather than protocol revenue.

At the end of Q3 the DAO will vote on the balance between protocol revenue for growth and value accrual going forward.

Motivation

The BAM Early Adopter Subsidy Programme has been a significant driver of BAM adoption across the Solana validator set. BAM network stakeweight has now crossed 31%, triggering the 100% JitoSOL delegation threshold established in JIP-28 and validating the programme’s effectiveness.

However, the programme was designed with a 12-week linear wind-down in Q3, reducing the subsidy from 100% to 0% on an epoch-by-epoch basis. This taper was intended as a soft landing, but it creates two problems at the current stage of adoption:

1. The taper weakens incentives at a critical moment. BAM has crossed the 30% threshold, but network-wide adoption is not yet complete. Reducing the subsidy during Q3 removes economic pressure on remaining non-BAM validators at exactly the point where full adoption is within reach. Maintaining 100% through Q3 keeps maximum incentive pressure until the programme’s natural end, driving adoption as high as possible before the subsidy expires.

2. The taper created a value accrual gap. Under the original JIP-31 design, Tokenholders accepted a temporary pause on 100% buybacks during Q1–Q2, with the expectation that the Q3 taper would gradually return revenue to value accrual. Extending the subsidy at 100% through Q3 delays that return. This JIP eliminates that gap by mandating the CSD to run par buybacks from its treasury reserves — ensuring Tokenholders receive full value accrual throughout Q3 regardless of the subsidy extension.

3. BAM is still ramping up. The release of the Maker Priority Plugin demonstrates the additional revenue streams that BAM will bring to the market as BAM plugins come online. Other features such as FireBAM and BAMPC have taken slightly longer than anticipated to ship and an additional quarter of BAM subsidy will close the revenue gap as both performance and additional revenue streams come online.

The result is a clean, no-compromise final quarter: full subsidy for maximum BAM adoption, full value accrual for Tokenholders, and a hard programme end at the close of Q3.

Key Terms

BAM Early Adopter Subsidy Programme — the incentive programme established by JIP-31 that redirects Jito protocol revenue to eligible BAM-running validators to accelerate BAM adoption.

Wind-Down Period (current) — the final phase of the programme under JIP-31, during which the fraction of protocol revenue allocated to the subsidy pool decreases linearly from 100% to 0% over ~12 weeks in Q3.

Hard Cutoff — the modified programme end proposed by this JIP, where the subsidy transitions from 100% to 0% instantaneously at the close of Q3.

Par Buyback — a CSD-funded value accrual operation that matches 100% of protocol revenue via JTO auction purchases, using CSD treasury reserves rather than protocol revenue.

CSD Treasury Reserves — the existing treasury allocation held by the Cryptoeconomics subDAO (JIP-17), available for value accrual operations.

Specification

1. Modify Subsidy Emission Curve

The JIP-31 Q3 linear wind-down is replaced with a flat 100% allocation through the end of Q3:

All other JIP-31 programme parameters remain unchanged:

• Validator eligibility criteria (BAM client, 50k SOL minimum, 3-epoch onboarding)

• Mechanism curve (effective stake calculation, inflection threshold, discount factor, cap)

• Claim window (10 epochs)

• Unclaimed reward reflow

• Programme modification authority via JIP

2. CSD Q3 Value Accrual Mandate

Extend the Cryptoeconomics subDAO term to the end of the year to execute value accrual operations throughout Q3 2026:

• Value Accrual: Par with 100% of protocol revenue — i.e., the CSD will deploy treasury reserves equal in value to the protocol revenue directed to the subsidy pool in each epoch.

• Mechanism: JTO auction buybacks or TWAP, consistent with the CSD’s existing value accrual mandate and operational infrastructure.

• Funding source: CSD treasury reserves (existing allocation under JIP-17 and extended under JIP-26). No additional treasury draw is required.

• Reporting: The CSD will publish its end of term report in July 2026. Provide active dashboarding throughout Q3. And a final report at the end of term in December.

3. Programme End and Value Accrual Resumption

At the close of Q3 2026:

• The BAM Early Adopter Subsidy Programme terminates. No further protocol revenue is directed to the subsidy pool.

• 100% of protocol revenue returns to the DAO for value accrual operations, resuming the pre-JIP-31 mandate.

• The CSD’s par buyback obligation under this JIP ceases. The CSD retains any remaining treasury reserves for use under its existing mandate.

• A new DAO vote on the composition of future spend of protocol revenue across value accrual and growth.

4. Exact Epoch Boundaries

The exact Solana epochs corresponding to the Q3 end-date and hard cutoff will be published on the governance forum prior to the vote, consistent with JIP-31’s existing provision for epoch boundary publication.

Implementation Path

Contributor Execution:

1. Update the subsidy distribution mechanism to remove the Q3 taper logic and maintain 100% allocation through the published Q3 end-epoch.

2. Configure hard cutoff at the Q3 end-epoch — subsidy drops to 0% in a single epoch transition.

CSD Execution:

1. CSD to publish a Q3 buyback plan on the governance forum within 14 days of JIP passage, specifying the operational cadence and treasury reserves committed.

2. CSD to execute par buybacks via JTO auction on an epoch-by-epoch or weekly basis throughout Q3.

3. CSD to publish reporting consistent with existing obligations.

Foundation Execution:

1. Publish updated programme timeline and emission curve on the governance forum and relevant documentation.

2. Communicate programme end-date to validators.

Benefits, Risks & Risk Analysis

Benefits

• Maximum subsidy impact. Maintains full incentive pressure through the entire programme duration, driving BAM adoption as high as possible before the programme ends.

• No value accrual gap. CSD par buybacks ensure Tokenholders receive uninterrupted value accrual throughout Q3, eliminating the trade-off between growth and value accrual.

• Clean programme end. A hard cutoff is simpler to communicate and coordinate than a 12-week taper. Validators know exactly when the programme ends.

• Pairs with 100% BAM delegation. With BAM stakeweight above 31% and JIP-28’s 100% delegation trigger crossed, maintaining full subsidy through Q3 creates maximum combined incentive from both stake delegation and revenue subsidy.

Risks

• CSD treasury depletion. Par buybacks at 100% of protocol revenue for one quarter will draw down CSD reserves. Mitigated by: the CSD’s existing treasury allocation was designed to fund value accrual operations; the CSD retains discretion on operational execution within the par mandate; and the obligation is limited to a single quarter.

• Hard cutoff validator impact. Validators experience a sudden revenue cliff at end of Q3 rather than a gradual taper. Mitigated by: validators have the full Q3 period to prepare for programme end; by Q4, BAM adoption should be at or near critical mass where the economic benefits of running BAM (JitoSOL delegation, plugin fees) are self-sustaining without subsidy.

• Protocol revenue uncertainty. If protocol revenue spikes unexpectedly in Q3, the CSD’s par buyback obligation increases proportionally. Mitigated by: The CSD has a large budget (~44k JitoSOL) and can manage treasury deployment on an epoch-by-epoch basis. The programme will terminate in the eventuality that the CSD budget expires.

Outcomes

1. 100% of protocol revenue is directed to the BAM subsidy pool through the entirety of Q3 2026.

2. The BAM Early Adopter Subsidy Programme ends with a hard cutoff at the close of Q3.

3. Tokenholders receive par value accrual via CSD-funded JTO auction buybacks throughout Q3, ensuring no gap in value accrual.

4. The DAO is equipped to make economic governance decisions for Q4 related to value accrual and growth going forward.

5. BAM adoption is maximally incentivised through the full programme duration.

Cost Summary & Funding Source

No additional treasury expenditure is required beyond existing CSD reserves.

Note: This JIP modifies the BAM Early Adopter Subsidy Programme (JIP-31) using the programme modification authority established in JIP-31’s specification. It does not amend the Constitution.