JST and UNI Deflationary Showdown: Who Will Lead the New Narrative of DeFi Value?

Massive token destruction and sustainable deflationary models are quietly rewriting the value logic of DeFi projects.

The #Uniswap Foundation and Uniswap Labs jointly released the 'UNIfication' proposal on Monday, announcing plans to activate the protocol fee switch and establish a token destruction mechanism. Following the announcement, the UNI token surged over 38%.

At the same time, the core DeFi protocol JustLend DAO of the TRON ecosystem has taken the lead in completing the first round of large-scale JST destruction, destroying approximately 559 million JST in one go, accounting for 5.66% of the total token supply.

These two major events mark the transition of #DeFi projects from purely functional protocols to economies with solid value support.

UNI deflation plan: governance proposal and market response

Uniswap's 'UNIfication' proposal undoubtedly dropped a heavy bomb on the DeFi market. This proposal aims to fundamentally change the value capture capability of the UNI token.

According to the proposal, Uniswap plans to launch protocol-level fee allocation, directing part of the transaction fees to the UNI burning pool to reduce the token circulation.

This mechanism will first be implemented in the v2 and v3 pools, and then expanded to L2 and future versions.

Even more strikingly, the proposal also includes directly burning 100 million UNI tokens from the treasury, accounting for about 16% of the circulating supply. This action aims to simulate the amount of burning that would occur if the fee mechanism had been activated since 2020.

Uniswap founder Hayden Adams stated, 'UNIfication marks a new phase for Uniswap, realigning tokens, protocols, and communities.'

The market responded very positively to this proposal, with the UNI price rising over 50% within 24 hours, breaking the $10 mark, and the market capitalization exceeding $6 billion at once.

JST deflation practice: the destruction mechanism that has been implemented

In sharp contrast to Uniswap, which is still in the proposal stage, JST's repurchase and destruction mechanism has already completed its first round of large-scale operations, theoretically moving directly into the practical stage.

According to the latest destruction announcement, JustLend DAO has extracted a stock yield of 59,087,137 USDT, using 30% of it (equivalent to 17,726,141 USDT) for repurchase and destruction of 559,890,753 JST, accounting for approximately 5.66% of the total token supply.

The remaining 70% of the stock yield (equivalent to 41,419,815 USDT) has been deposited into JustLend DAO's SBM USDT lending market to earn interest, and will be gradually executed for destruction over the next four quarters.

This design ensures the continuity and stability of the deflation mechanism, avoiding short-term market speculation.

JST's deflation model essentially constructs a 'virtuous cycle of value recovery', converting protocol fees into token value, and then forming price support through deflationary pressure, ultimately creating a long-term, sustainable 'value flywheel'.

Funding model comparison: sustainability and transparency

The design of JST's repurchase fund source demonstrates its unique advantages, as it precisely focuses on the profitability of the two core components of the JUST ecosystem: 'JustLend DAO and USDD', without the risk of 'robbing Peter to pay Paul'.

Specifically, the JST repurchase funds come from two parts:

Firstly, the existing and future net income of JustLend DAO covers 'existing stock yield + future incremental yield'; secondly, the incremental income after USDD's multi-chain ecological profits exceed $10 million.

Both types of funds will be fully directed towards JST repurchases and permanently destroyed.

In contrast, while UNI's fee mechanism is larger in scale—analysis suggests Uniswap can allocate about $460 million in transaction fees for repurchase and burning each year, with an annualized deflation rate of about 5%.

However, the activation of the fee switch means that the protocol will take a portion of the transaction fees from liquidity providers (LPs), which may have some impact on liquidity.

Deflation strategy analysis: immediate impact and long-term sustainability

In terms of deflation strategy, JST and UNI demonstrate different philosophies.

JST has adopted the clever design of 'stock yield as the base, incremental yield as the energy source', establishing a clear and sustainable deflationary closed loop for the token.

The 5.66% of total supply in the first round of destruction is just the starting point, and as stock funds are gradually released and incremental funds are continuously injected, the cumulative destruction's proportion of total supply will gradually increase.

UNI adopts a combined strategy of 'one-time large-scale destruction + continuous fee burning'.

On one hand, 100 million UNI tokens (accounting for 16% of the circulating supply) were directly destroyed from the treasury; on the other hand, a long-term deflation was achieved through a continuous fee mechanism.

Both strategies have their merits, but JST's actual implemented advantages have earned it market trust.

Ecological support and value prospects

JST's value growth does not solely rely on a single deflationary logic but is deeply rooted in the comprehensive support of the entire JUST ecosystem's 'full-link value closed loop'.

As the core DeFi system of the TRON ecosystem, JustLend DAO's total locked value (TVL) has surpassed $7.62 billion, with a user base of 477,000, firmly maintaining its position as the leading DeFi protocol in the TRON ecosystem.

Even in the global lending track, JustLend DAO, benefiting from its single-chain deployment advantage, has consistently ranked among the top four in the industry in terms of TVL, firmly positioned in the 'first tier of lending DeFi protocols'.

In terms of profitability, JustLend DAO's business model has been validated by long-term operational data, capturing nearly $2 million in fees in Q3 alone, with an average daily income of over $20,000 and a steady growth trend.

This diversified and sustainable profit base provides a continuous fuel source for JST's deflation mechanism.

From market performance, after the UNI proposal was announced, the price surged over 38%, while JST also triggered a positive market response after completing its first round of destruction. Both players have won market recognition through their deflationary mechanisms.

However, upon closer inspection, the actual deflation mechanism, clear funding model, and robust ecological profit support that JST has implemented give it a unique competitive advantage in the DeFi deflation track.

@Justin Sun孙宇晨 @JUST DAO #TRONEcoStar #JustLendDAO @TRON DAO