Jito DAO Approves Proposal to Double Its Revenue - What Does This Mean for $JTO?

Jito Labs is, in many ways, the engine room of Solana. With 96% of network stake running the Jito-Solana validator client and $jitoSOL’s dominance of the LST sector, Jito certainly wields significant influence across the ecosystem.

Despite Jito’s position of power, little of the protocol’s success has flowed through to its native token, $JTO. However, a slew of recent governance proposals might be about to change that.

What are the changes coming to Jito’s financials, and what could they mean for $JTO and its holders?

JID-24 Approval Doubles DAO Revenue Allocation

On September 4, $JTO holders voted unanimously in favor of JID-24, a governance proposal that sought to direct block engine and future BAM fees to the Jito DAO Treasury. 

Prior to the proposal, 6% of Jito Block Engine fees were split between Jito Labs and the Jito DAO. With JID-24 approved, Jito Labs has yielded its share to the Jito DAO, alongside future fees generated through BAM.

The change effectively doubles Jito DAO’s allocation of protocol revenue, which is expected to rise further once BAM goes live. Despite the catalyst, markets seem not to be taking notice, with $JTO down 8.7% in the last 7 days.

$JTO’s underwhelming performance in the face of doubling token value accrual is perhaps due to the asset’s vague value flow mechanics. While many protocols across Solana have outlined clear, programmatic buyback models, Jito DAO is handling things more strategically.

Back in June, Jito DAO passed a governance proposal (JID-17) enabling the formation of a Cryptoeconomics Sub-DAO, or CSD. The Jito DAO CSD was initially given $7.5M in $jitoSOL and 5M $JTO tokens to optimize $JTO value accrual through methods like buybacks, yield subsidy, and fee switch vaults.

As a result of JID-24’s approval, revenue allocated to the Jito DAO treasury through block engine fees and futures BAM fees will primarily flow to the CSD’s strategic value accrual mechanisms.

What Does This Mean for $JTO?

While the CSD hasn’t outlined precisely how it intends to use Jito DAO’s allocation of protocol revenue, there’s no denying that doubling the treasury’s income should boost $JTO value accrual strategies.

In August, Jito DAO generated $1.61M in revenue. Pursuant to JID-24’s approval and Jito Labs allocating its 3% share of block engine fees to the DAO, we can expect to see this figure increase dramatically. 

Additionally, Jito Labs CEO Lucas Bruder estimates that BAM plugins could bring in an additional $15M per year in DAO revenue.

According to Artemis data, Jito’s current marketcap-to-revenue ratio sits at 30.5. While this is certainly respectable in its own right, the ratio still trails those of fellow Solana protocols like pump.fun (2.6), Jupiter (4.2), and Raydium (19.6).

Meanwhile, $jitoSOL could be on the cusp of attracting institutional inflows at a seismic scale. $jitoSOL is currently the LST of choice in REX-Osprey’s Solana Staking ETF, Wall Street’s only listed $SOL ETF. VanEck is also eager to join the liquid-staking game, having filed an S-1 registration form for its $jitoSOL ETF on August 22.

Ultimately, $JTO’s growth is still hamstrung by vague value accrual mechanisms. While the bulk of Solana’s DeFi apps have opted for programmatic buybacks, $JTO’s growth is tied to the whims and strategies of the DAO’s CSD.

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