Summary
- Since 85-90% of Jupiter’s open interest consists of long positions, traders experienced significant losses. Traders’ aggregate unrealized PnL fell by $30M, from +$15M last week to roughly -$15M as of this morning. Similarly, their net realized PnL declined by an additional $25M this week.
- Despite a 13.4% decrease, JLP outperformed the index by 6.4% due to the traders’ losses and fees accrued due to their lower delta exposure to the underlying assets.
- The crypto market’s turbulence over the last 24 hours and throughout the week has produced a substantial increase in liquidation volumes on Jupiter, particularly on the long side.
- While liquidations reduced Jupiter’s aggregate open interest, the protocol’s volume remains elevated, averaging 27% higher than the previous three weeks. ETH volumes have grown the fastest, averaging 82.3% higher than the last three weeks.
- In response to the extreme market events, Chaos Labs thoroughly reviewed Jupiter’s market parameters. We do not suggest any changes at this time.
Recommended Actions
- No parameter updates are necessary now; we will continue monitoring all markets diligently.
- If volatility continues, to compensate LPs for taking substantial risks, consider:
- Increasing borrowing rates
- Increasing price impact to mirror widening spreads
Analysis Overview
Liquidations
Jupiter has liquidated $855 million of open positions in the past seven days — the highest seven-day sum in over three months — 93% of which have been longs. The total value liquidated over the past 24 hours has not exceeded that of August 1st.
The total number of liquidations, however, peaked over the last 24 hours, more than doubling the next-highest count of liquidations on any single day within the past 90 days.
Open Interest and Volume
Aggregate open interest has declined due to the scale of liquidations this week.
As expected, utilization rates fell in tandem with this open interest.
Despite this decline, Jupiter’s volume continued to increase over the past week, averaging $701M per day, compared to $542M on average in the three weeks prior. This represents a 29% increase.
SOL continues to be the most dominant market on Jupiter, accounting for ~75.7% of the protocol volume last week.
PnL
Since July 30th, traders’ gross realized PnL declined by ~ $33M, or ~$43M in net terms.
Traders’ aggregate unrealized PnL, meanwhile fell by $30M, from +$15M last week to roughly -$15M as of this morning.
Below, we present the gross PnL from a more granular perspective, alongside the price of BTC, where the correlation between price movements and negative PnL can be seen.
Unique Daily Users
Unique daily users spiked from an average of ~5,000 last week to a peak of more than 10,500 over the last 24 hours.
Fees
Jupiter’s cumulative fees this week reached ~$8.5M, for a daily average of $1.2M, a 73% increase from ~$700k/day over the previous three weeks.
JLP Pool Composition
In USD notional terms, the JLP pool has changed fairly little over the past week.
However, the composition of the JLP Pool has fluctuated meaningfully. USDC and USDT deposits have each decreased by >15%, while SOL, BTC, and ETH deposits have increased by 46%, 13%, and 6% respectively.
JLP Market Comparison
JLP’s price decreased by 13.4% between 07/30 and 08/05. In the same period, BTC decreased by 21.8%, ETH by pools, and SOL by 33%.
Given the JLP pools’ target weights:
- SOL - 44%
- BTC - 11%
- ETH - 10%
- USDC - 26%
- USDT - 9%
JLP basket price has decreased by ~19.8%, reflecting a 6.4% outperformance by the JLP.
OI Distribution
Traders continue to exhibit a strong bias toward long positions, and open interest has decreased across the board.
SOL:
SOL’s OI dropped by more than 50% to a low of just $88M in the last 24 hours — the lowest since April 12th, 2024.
ETH:
ETH’s OI has fallen a similar percentage, though much less so in nominal terms.
BTC:
BTC’s OI, on the other hand, has held fairly stable, falling by 33% day-over-day but remaining at roughly the average over the last 90 days
Note: The data in this report was retrieved on Aug 5, 2024 @ 5am UTC.