Members of Jupiter DAO, the crypto collective that governs the Solana-based exchange, are complaining about the amount of influence the project’s team have over its decentralised governance structure.
They say team members are using the sizable allocations of the project’s JUP governance token they received as part of their compensation packages to unfairly influence governance votes.
As a result, the team members are undermining decentralisation.
“Team members are the vote creators, and if they hold such a large amount of JUP tokens and are allowed to vote, they can easily sway the outcomes in their favor,” Thisisfun, a pseudonymous Jupiter DAO governance participant, said in a Wednesday post on the Jupiter governance forum.
“This is completely wrong and unacceptable. Honestly, I’m shocked that there are team wallets holding such a massive amount of JUP with voting rights.”
DAOs, or decentralised autonomous organisations, are a governance model popular among crypto projects.
They work by letting holders of tradable tokens propose and vote on changes to a DeFi protocol and how it should allocate funds.
While DAOs attempt to distribute voting power evenly within their communities, in practice many often are steered by small groups of rich and powerful players.Jupiter isn’t the only DeFi protocol battling accusations of de facto centralisation.
On June 4, Rep. Sean Casten brought up a recent squabble about the level of centralisation in governance at Uniswap DAO during a congressional hearing.
The testimony highlighted the complex governance practices at work in DAOs, and raised questions about how lawmakers may legally define decentralisation as they consider legislation for the industry.
A ‘flawed’ model?
At Jupiter DAO, the recent dust-up began on June 6 when BuddyChaddi, a pseudonymous DAO participant, pointed out a Jupiter team member wallet which had used over 24 million JUP tokens to vote on a recent DAO proposal.
“I’m not against the team having an allocation, they’ve worked hard all these years and built Jupiter from scratch,” BuddyChaddi said in a post to the Jupiter governance forum titled “Flawed governance.”
“But the problem is their stake is comparatively great in terms of influencing the DAO.”
Jupiter launched its JUP token in January 2024, giving out 200 million tokens to early users through an airdrop. Jupiter team members received 20% of the supply.
Team members receiving large amounts of a project’s token isn’t uncommon.
Such tokens are usually vested, crypto parlance for being locked up — unable to be sold on the market — and released on a predetermined schedule often spanning several years.
While tokens are vested, they usually cannot be used to earn additional rewards, or vote on DAO governance proposals.
The Jupiter co-founder assured DAO members that he and fellow co-founder Siong Ong will not participate in DAO votes, but said a third, unnamed co-founder would continue to vote, but stop accruing staking rewards.
In Jupiter DAO’s most recent governance vote, one wallet controlled by the unnamed Jupiter team member accounted for over 4.5% of all votes cast.
More controversy
It’s not the first controversy to befall Jupiter’s founders.
In March, Ng proposed fronting 280 million of his vested JUP to be split among 65 new team members in exchange for a 220 million token bonus — worth around $94 million — from the DAO’s community reserves.
The vote passed with 63% of participants in favour. Yet some DAO members criticised the size of the compensation package and argued it was a poor use of the DAO’s funds.
In March 2024, Jupiter’s founders drew considerable backlash over a budget proposal, which later passed, to spend $7 million on the salaries of four team members.
