JLP Research Report

Forrest

Forrest

— 2 min read
JLP Research Report
Published Dec 31, 2023. JLP has gone form $1.76 to $3.34 with limited volatility.

Project: Jupiter

Website link: https://jup.ag/perps/long/SOL-SOL

Token: $JLP

⚠️Important Note

$JLP is not the same as $JUP.

$JLP is the LP token for Jupiter’s perp exchange. $JUP will be the governance token for Jupiter exchange and has not launched yet. There will be several rounds of airdrops for $JUP, the first of which has already been announced.

Overview: Jupiter exchange is the largest decentralized exchange on Solana. They have recently launched a decentralized perpetuals trading platform where users can trade with leverage directly on chain on Solana.

$JLP is the LP token that represents deposits into the Jupiter perpetuals LP pool. The LP pool receives 70% of the fees generated by the Jupiter perp exchange, which accrues to the value of $JLP.

The LP pool consists of roughly 34% SOL, 10% ETH, 6% WBTC, 40% USDC, and 10% USDT.

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$JLP trades on the open market, so its value can fluctuate, but it roughly tracks to the performance of the underlying assets at their given allocations (like an index fund) + the fee revenue accrued.

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Jupiter Revenue Accrual

As a JLP holder, you receive 70% of the fees generated by the trading exchange. This amount is directly reinvested into the JLP, increasing the price of JLP, facilitating continuous compounding of yield and earnings. The exchange generates fees and yield in three ways:

  • Opening and Closing Fees of Positions
  • Borrowing Fees of Positions
  • Trading Fees of the Pool

The fees are being compounded into the pool hourly.

Why buy $JLP?

  • Purchasing and owning $JLP essentially gives the owner exposure to a portfolio of 34% SOL, 10% ETH, 6% WBTC, 40% USDC, and 10% USDT in addition to fee revenue that currently is tracking at 126% APY (this will fluctuate and likely decrease over time).
  • While not confirmed, owning $JLP will likely qualify holders for subsequent $JUP airdrops.

Risks

Similar to other derivatives protocols like Gains Network and GMX, the Jupiter LP pool is responsible for paying out the PnL of traders.

If a trader incurs a net positive P&L, the losses are sourced from the JLP pool to compensate the trader. Conversely, if a trader's P&L is net negative, the gains are deposited into the JLP pool for LP holders.

There is also smart contract risk, as the Jupiter LP could be hacked or exploited.

Where to buy $JLP

$JLP can be purchased on the open market on Jup.ag with the $JLP contract address: 27G8MtK7VtTcCHkpASjSDdkWWYfoqT6ggEuKidVJidD4

Occasionally Jupiter will lift the deposit cap of the pool for $JLP and you can deposit directly here: https://jup.ag/perps-earn/buy/USDC

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