Background
Jupiter is implementing a Jump Rate Model for Borrowing Rates designed to enhance the protocol’s overall health. By dynamically adjusting borrowing costs based on utilization, this model ensures more efficient capital allocation, discourages excessive risk, and promotes balanced market behavior.
Formula Implementation
If utilization < target_utilization:
Else:
Motivation
Building on the historical utilization rates and borrowing costs observed on Jupiter, along with the platform’s substantial trading volumes and consistent demand, we propose market-specific adjustments to optimize performance. The SOL market, in particular, has recently demonstrated exceptionally high utilization rates, underscoring its dominance within Jupiter’s ecosystem. We recommend maintaining borrowing rates aligned with the current target utilization of approximately 70% to capitalize on this trend. This strategy reflects user behavior, as participants have shown a consistent willingness to borrow at these levels, ensuring that fee revenue remains strong.
For BTC and ETH, we propose maintaining slightly lower borrowing rates to reflect their reduced volatility and encourage further adoption of the platform. In contrast, for stablecoin assets, our strategy focuses on incentivizing increased short trading activity, which remains significantly underrepresented compared to long positions within Jupiter. We aim to foster a more balanced open interest by maintaining lower borrowing fees for stablecoins, aligning JLP exposure more closely with index distribution expectations.
This approach strikes a careful balance between fee revenue generation and market incentives, ensuring borrowing costs remain competitive while guiding demand toward more equitable utilization across all asset classes.
SOL
| Utilization | Max Rate (APR) | Target Rate (APR) | Target Utilization | Lower Slope (APR) | Upper Slope (APR) | Borrowing Rate (APR) |
|---|---|---|---|---|---|---|
| 50% | 250% | 70% | 80% | 87.5% | 900% | 43.8% |
| 80% | 250% | 70% | 80% | 87.5% | 900% | 70.0% |
| 90% | 250% | 70% | 80% | 87.5% | 900% | 160.0% |
| 100% | 250% | 70% | 80% | 87.5% | 900% | 250.0% |
BTC & ETH
| Utilization | Max Rate (APR) | Target Rate (APR) | Target Utilization | Lower Slope (APR) | Upper Slope (APR) | Borrowing Rate (APR) |
|---|---|---|---|---|---|---|
| 50% | 250% | 56% | 80% | 70% | 970% | 35.0% |
| 80% | 250% | 56% | 80% | 70% | 970% | 56.0% |
| 90% | 250% | 56% | 80% | 70% | 970% | 153.0% |
| 100% | 250% | 56% | 80% | 70% | 970% | 250.0% |
USDC & USDT
| Utilization | Max Rate (APR) | Target Rate (APR) | Target Utilization | Lower Slope (APR) | Upper Slope (APR) | Borrowing Rate (APR) |
|---|---|---|---|---|---|---|
| 50% | 175% | 15% | 80% | 18.75% | 800% | 9.4% |
| 80% | 175% | 15% | 80% | 18.75% | 800% | 15.0% |
| 90% | 175% | 15% | 80% | 18.75% | 800% | 95.0% |
| 100% | 175% | 15% | 80% | 18.75% | 800% | 175.0% |
Parameter Specification
| Asset | Min Rate | Target Rate | Max Rate | Target Utilization | Lower Slope | Upper Slope |
|---|---|---|---|---|---|---|
| SOL | 0% | 70% | 250% | 80% | 87.5% | 900% |
| BTC | 0% | 56% | 250% | 80% | 70% | 970% |
| ETH | 0% | 56% | 250% | 80% | 70% | 970% |
| USDC | 0% | 15% | 175% | 80% | 18.75% | 800% |
| USDT | 0% | 15% | 175% | 80% | 18.75% | 800% |