Summary
- On July 10, the base fee was reduced to 6 bps in all markets, and SOL price impact was reduced. As expected, these changes led to reduced fees. While this makes the protocol more competitive and potentially increases volume, it exposes it to manipulations, particularly in the highly liquid SOL market.
- Over the past week, market prices have increased; JLP has increased by 3.1%, with 1.1% in impermanent loss due to the higher long utilization than short utilization.
- Although traders’ gross profits were positive due to their long exposure, their net profit was negative. Meanwhile, Jupiter’s performance remained stable, with a 3.5% reduction in volume.
- AUM continued to grow, mainly in notional terms due to the market increase, while in token terms, it remained relatively stable, with a slight increase in wBTC supplied.
Protocol level
JLP Pool
Markets went up by approximately 5% over the past week, and TVL increased at a similar rate. The token amount of wBTC increased by nearly 10%, from ~650 to ~710.
No significant change to pools’ distribution recently.
Utilization was pretty stable recently, with SOL at approximately 55%, WBTC at ~35%, WETH at ~20% and stables at ~15%.
JLP Market Comparison
JLP price increased by 3.1% between 8/7 and 14/7. In the same period, BTC increased by 7.5%, ETH by 7.8%, and SOL by 6.1%.
Given the JLP pools’ weights:
- SOL - 45.56%
- BTC - 9.15%
- ETH - 10.77%
- USDC - 25.83%
- USDT - 8.68%
JLP should have increased by 4.2%, reflecting a 1.1% impermanent loss.
Volume
Volume was slightly moderate on Jupiter in the past week compared to previous weeks, averaging $365M per day, compared to $378M on average in the 3 weeks prior.
SOL continues to be the most dominant market on Jupiter, consisting ~81% of the protocol volume on the last week.
Unique Daily Users
Looking at unique daily users, it suggests a maximum of ~7,000 users on the most active days. Recently, it was between 2,000 and 7,000.
Realized PnL
Over the past week, there were no large traders’ profits, reflecting drawdowns for LPs. While traders profited in gross terms due to the market increase and long skew of OI between July 8-14, they experienced losses in net terms.
Market Level
OI Distribution
Traders continue to have a strong bias for long positions, and there’s no reason to expect that to change.
SOL:
BTC:
ETH:
Price Impact Histogram
On July 10, the base rate was reduced to 6 bps in all markets, and the price impact fee scalar for SOL was increased to 1.25B from 1B, which also reduced the price impact that will be paid in that market.
Price impact and trading fees are very competitive on Jupiter, with the median trade paying just 6 bps across all markets between July 11 and 13 since the change in price impact. The P99 trades pay 8.3 bps in the SOL market, while BTC and ETH markets still pay 6 bps. Based on those three dates, price impact went down by 1 bps as expected for the BTC and ETH markets, while for SOL, the lower percentiles went down by 1 bps, and P99 went down by nearly 2 bps, due to both the change in base rate and the scalar.
As noted before, this imposes significant risks. One of the risks includes traders breaking down their trades, which the exploiters that operated on the platform might use to trade profitably again. This means that the patterns we observed before the previous change to price impact fees will be even more profitable for traders exploiting the system. Another potential risk is Oracle manipulation during times of low liquidity in the CEX spot market, while on Jupiter, prominent and very cheap liquidity, reaching up to approximately $100M depending on utilization, could be available at any given moment. This significant liquidity and low fees could exacerbate the risks of manipulation and other exploitative behaviors.
SOL:
BTC:
ETH:
