Solana founder responds to Jupiter co-founder token buyback issue: Staking is more beneficial to the protocol's capital structure
TL;DR
Solana founder Toly suggests staking is better than buybacks for long-term capital structure, as it allows long-term holders to gain equity linked to protocol profits.
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According to ChainCatcher, Solana founder Toly responded to Jupiter co-founder's question on the X platform regarding "whether to continue token buybacks or provide growth incentives for existing users," stating: "Capital formation itself is extremely difficult; traditional finance typically requires more than 10 years to truly complete capital accumulation. Compared to buybacks, I believe a more reasonable path is to replicate this long-term capital structure."
In the crypto industry, the closest thing to this mechanism is staking. Participants willing to hold long-term dilute the equity held by those who are not. Protocols can convert profits into protocol assets that can be redeemed with tokens in the future, allowing users to lock up and stake their tokens for a year to earn token rewards. As the protocol's balance sheet continues to expand, those who choose to stake long-term will gain a larger share of actual equity. This equity is directly linked to the protocol's future profits and grows with future earnings.