On the eve of the "Solana Summer" outbreak, why did Jet Protocol, which had received investment from Paradigm, cease operations?

23-12-14 16:31
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Table of Contents:
· Insufficient Funds, Difficulties in Project Operation
· Development Team from ConsenSys, Project Previously Invested by Paradigm
· Died on the Eve of the "Solana Summer" Outbreak


On December 12th, James Ryan Moreau, co-founder of Jet Protocol (@jrmoreau), announced on the community forum in a post that Jet Protocol Holdings LLC, the development company behind Jet Protocol, and the Swiss association established for the DAO, will officially cease protocol operations on February 1st, 2024, and its entities and related legal entities will begin to dissolve starting in December.


As a DeFi project in the Solana ecosystem, Jet Protocol once received investment from Paradigm in 2021, but now it has announced its shutdown. What is the reason behind this?



Funds Insufficient, Project Operations Difficult to Continue


The news of Jet Protocol's shutdown did not appear on social media. Neither Jet Protocol's official X account (@JetProtocol) nor the X account of the co-founder mentioned this matter. The latest update from Jet Protocol is still on August 21st.


According to a post by James on the forum, the Jet Protocol team "did not properly consider time as a resource, not just capital." He pointed out that from the beginning, the Jet Protocol team was committed to building something truly practical, not just providing a quick solution.


However, by August 2023, approximately one and a half months after the fixed-rate market was finally launched, the remaining employees of the Jet Protocol development team were laid off due to insufficient funds to maintain full-time salaries. Although Jet Protocol attempted to raise more funds from existing or new investors, this effort ultimately failed.


Despite this, James still allows the protocol to continue running: "Although we cannot financially support the continued development of the protocol, there may still be some users using it." At the same time, several developers at Jet Protocol continue to maintain Jet DAO's daily operations based on the "for love" principle.


Since then, Jet Protocol has been using the remaining funds to maintain front-end and back-end hosting services, RPC services, and other aspects of operations. However, as the remaining funds have been depleted and there is no benefit or support to help Jet Protocol continue to move forward, James has decided that "it is time to end it in an orderly manner."


However, James also stated that the code of Jet Protocol is completely open source and encourages anyone to fork the code.


Starting from December 7th, Jet Protocol lending has been disabled and users are only allowed to repay loans and withdraw collateral on Jet Protocol. From February 1st, 2024, all front-end services managed and paid for by Jet Protocol Holdings, LLC will be taken offline, but programs running on the Solana blockchain will continue to operate.


"Any front-end of an application or governance requires the construction, maintenance, and support of the community and several backend tools. If anyone wants to run them, these tools will be open source."


According to DiFiLlama data, as of the time of publication, the total market value of Jet Protocol is $629,153 USD, while the TVL is $320,828 USD, a decrease of over 99% from its peak of $38.07 million USD.



The development team comes from ConsenSys, and the project has received investment from Paradigm.


In fact, Jet Protocol was still active in July and August this year. On July 21, Jet launched the Jet Liquidity Incentive Program, with a total of 137,700,946 JET token shares. On August 9, Jet Protocol released the V2 test version and launched the Jet Margin margin system, the Jet Bond fixed-rate market, and the Jet Term fixed-term market.


As the "first fixed-rate and fixed-term market in DeFi based on a central limit order book (CLOB)", Jet Protocol once dominated the headlines.


In April 2021, former ConsenSys developers Wil Barnes and James Ryan Moreau announced the launch of the Jet Protocol lending protocol based on the Solana blockchain. The protocol will focus on innovative loan products and cross-chain interest rate arbitrage. In May, Jet Protocol Holdings, LLC was officially established.


In June, Jet Protocol announced the completion of a $4.8 million seed round of financing, with participation from MGNR, Sino Global Capital, and others; in July, Jet Protocol officially released its white paper.


By November, Jet Protocol announced the completion of a new round of $6.8 million in financing, including participation from star VCs such as Paradigm, Reciprocal Ventures, Solana Ventures, GSR, and Three Arrows Capital.



At that time, Georgios Konstantopoulos, a research partner at Paradigm, said: "Lending is a core element of DeFi infrastructure. Jet Protocol has one of the strongest and most experienced teams in the cryptocurrency field, and we are very happy to help them build the Solana ecosystem."


And this financing of over $10 million has now been completely exhausted, and Jet Protocol has come to an end.


Dead on the eve of "Solana Summer" outbreak


Compared to the shutdown of Jet Protocol, the Solana ecosystem is on the verge of an explosion. Since early 2023, Solana's TVL has shown significant growth, now exceeding $1.1 billion.



In addition, as SOL is used to purchase NFTs and participate in on-chain activities, a large amount of SOL is being locked up, reducing its circulation in the market. This locking effect is expected to promote an increase in its price, forming a positive growth spiral.


Related reading: "MT Capital Research Report: The Eve of Solana's Comprehensive Ecosystem Outbreak".


With the price of BTC rebounding, the token price of SOL has skyrocketed by over 200% in just two months. The recent premium of Grayscale Solana Trust is about 800%, which also indicates institutional investors' optimism towards Solana.


Meanwhile, with the growth of TVL, DeFi project airdrops, and the maturity of the liquidity staking market, DeFi and LSD products on Solana may attract a large amount of capital. NFT projects, especially those that combine with the metaverse and gaming fields to provide unique user experiences and innovative projects (such as xNFT), may become investment hotspots.


Related reading: "Solana's expected airdrop boosts, a list of 12 potential airdrop projects."


Overall, Solana may become the world's leading public chain ecosystem, attracting more international users and developers. Solana's technological innovations, such as high TPS and low latency, will enable it to take a leading position in high-performance blockchain applications, such as large-scale games and complex DeFi applications.


Therefore, Jet Protocol, which was once favored by top crypto VC Paradigm in the Solana ecosystem, has now shut down at this time, which is very regrettable.


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