In the world of cryptocurrency, meme tokens have been known for their extremely thin liquidity, which allows for rapid pumps in value. However, Jupiter DEX is looking to change that narrative by encouraging the holding of solid projects and focusing on liquidity metrics. The Jupiter DEX aggregator may soon introduce a metric to identify meme tokens with low liquidity depth, which can be easily manipulated for quick pumps. This poses a risk for buyers who may be swayed into buying at a higher price, only for the token to crash shortly after.
@weremeow, the founder of Jupiter, is planning to add a liquidity depth metric as a warning to potential buyers of meme tokens. Most meme tokens struggle to absorb selling pressure, leading to immediate price crashes even with small orders. JUP tokens were launched in a decentralized pool with enough liquidity to support big exits without crashing. Meme token tools currently lack a direct metric to measure the potential to absorb selling, which poses a challenge for investors.
There is a noticeable disparity between liquidity and trading volumes in the decentralized exchange (DEX) space, with some tokens having low liquidity supporting high trading volumes. This makes these tokens risky due to inflated bot traffic. Jupiter DEX has seen a surge in low-cost, high-risk token trading, with memes and low-cap tokens surpassing native SOL trading volumes. Jupiter is attracting traffic from various Solana DEXs, particularly Raydium and Orca, aiming to provide easy-to-use tools for investors.
Some high-quality tokens graduate to a deeper liquidity pool after surviving for a certain period, but even then, there can be a disparity between available liquidity and daily turnover. The idea for a new liquidity metric comes from the need to improve the robustness of decentralized trading pairs. Platforms like Aerodrome and Uniswap have introduced tools for targeted liquidity and engineered liquidity conditions to enhance trading experiences.
In terms of token distribution, Jupiter may introduce additional JUP airdrops, potentially using unclaimed tokens from previous drops to fund initiatives like Active Staking Rewards (ASR). JUP tokens can be staked to earn rewards and used for voting on proposals within the ecosystem. Jupiter DEX has generated significant fees for routing and pricing on Solana DEX, making it a valuable tool for traders. The project is also looking to reduce the token supply by 30% to increase the value for holders and maintain market stability.
