{"time":1735930408342,"blocks":[{"id":"HUspOM2e_g","type":"header","data":{"text":"Introducing: The JLP Navigator Vault ","level":1}},{"id":"HZC2k0ybuD","type":"header","data":{"text":"What is JLP?","level":2}},{"id":"c4safpxOGW","type":"paragraph","data":{"text":"Before going any further, it is crucial to first understand the Jupiter Liquidity Pool, aptly named JLP.

Essentially, it's a giant pool of liquidity comprised of BTC, ETH, SOL, USDC and USDC.

Each $JLP token represents a portion of JLP's entire funds, and earns fees generated on @JupiterExchange's perps platform.

JUP's perps dex is massive, accounting for approximately 3/4 of total OI on Solana, and generating insane fees for JLP holders.

$JLP price reflects fee generation in the same way LSTs do.

This comparison makes $JLP's 3x since inception even more impressive."}},{"id":"GCv880rS9j","type":"header","data":{"text":"The Navigator Vault","level":1}},{"id":"MSD1xtK0M9","type":"paragraph","data":{"text":"We can break the vault down into three key ideas."}},{"id":"SumFQpSk8a","type":"list","data":{"style":"ordered","items":["Leverage","Hedging","Funding Fees"]}},{"id":"VhnAHIuf6w","type":"header","data":{"text":"Leverage:","level":2}},{"id":"xn8mW3uJbz","type":"paragraph","data":{"text":"A tool that allows traders to operate a larger market position with a relatively smaller amount of capital.This is done through borrowing on platforms such as Drift.

With leverage, you borrow funds to increase your position size.For e.g. using 10x leverage, you can open a $10,000 position with only $1,000 of your own capital.

This would be a 10:1 leverage ratio."}},{"id":"L0_1xPRAtt","type":"image","data":{"caption":"","withBorder":false,"withBackground":false,"stretched":false,"file":{"url":"https://pbs.twimg.com/media/Ge63sO1XgAAPbJz?format=jpg&name=900x900"}}},{"id":"I4jeBdEDnm","type":"paragraph","data":{"text":"Let's look at an example:"}},{"id":"qNihlBKdGq","type":"list","data":{"style":"ordered","items":["You open a $10,000 long using $1,000, this is 10x leverage.","If the asset increases by 10%, your position is now worth $11,000, resulting in $1,000 profit, and a 100% ROI.","Conversely if the asset falls by 10%, your position is now worth $9,000, netting a $1,000 loss and thus liquidation occurs."]}},{"id":"zw-tiJ2VE9","type":"paragraph","data":{"text":"Essentially, with leverage you are able to amplify profits and losses.

@vectis_finance use leverage to increase their exposure to JLP's fees by depositing $JLP on Drift, and borrowing USDC to purchase further $JLP.

The Navigator Vault is dynamic and can reach up to 3x leverage, boasting outsized returns to depositors."}},{"id":"znGba_Kp7v","type":"header","data":{"text":"Hedging:","level":2}},{"id":"jiQQ-JyXSq","type":"paragraph","data":{"text":"As previously stated, the $JLP token represents a share of the entire liquidity pool, and as it contains BTC, SOL and ETH, $JLP's price is subject to the volatility of these assets.\n

To date, JLP has performed extremely well due to the fees that the token accrues from Jupiter's perps platform, resulting in a current APY of ~90%.\n

So how can you benefit from the yield without exposure to price volatility? That's where hedging comes in."}},{"id":"5XcbEc9Les","type":"image","data":{"caption":"","withBorder":false,"withBackground":false,"stretched":false,"file":{"url":"https://pbs.twimg.com/tweet_video_thumb/Ge6-libWMAAcKHh.jpg"}}},{"id":"rQi1R-6Gqw","type":"paragraph","data":{"text":"In summary, by taking a short position on the volatile assets held by the JLP, you're exposure to them is nil.

It's like being short and long at the same time. It cancels out. 🙅

Therefore, you can just earn your share of fees. Neat right? \n\nHedging ensures that the Navigator's yields are consistent, even during market turbulence.\n

But there's more..."}},{"id":"16392JY6XH","type":"header","data":{"text":"Funding Rate Fees","level":2}},{"id":"OB4KOE69zx","type":"paragraph","data":{"text":"The funding rate is a small fee paid by one side of the perpetuals contract to the other.

If the perp is trading at a premium to the spot price, which tends to occur during bullish market sentiment, then the funding rate will be positive.

As a result, longs will pay shorts a small fee.This fee slightly discourages those with a long position, and slightly incentivises traders to go short, as they will recieve a tiny payment."}},{"id":"G3bFlYkUlw","type":"image","data":{"caption":"","withBorder":false,"withBackground":false,"stretched":false,"file":{"url":"https://pbs.twimg.com/media/Ge68AJ3XgAAlCWX?format=jpg&name=900x900"}}},{"id":"nexgki7Wnd","type":"paragraph","data":{"text":"Consequently, the perpetual futures contract price will be encouraged to move closer to the underlying spot price.

If however the perp is trading at a discount to the spot price, which tends to occur during bearish market sentiment, then the funding rate will turn negative.

So shorts will pay longs a small fee.This fee discourages shorts, and incentivises traders to go long, as now they will recieve a tiny payment.

Again this encourages the perpetual futures contract price to move closer to the underlying spot price.

Remember, it is not a fee taken by the exchange, or an interest charge to maintain an open position, simply a feature to manage price action."}},{"id":"fRkfgNmXG-","type":"header","data":{"text":"So how does the Navigator Vault benefit from funding fees?","level":2}},{"id":"CD1gX5strq","type":"paragraph","data":{"text":"To achieve delta-neutrality, Vectis hedges against BTC, SOL and ETH by shorting their respective perp contracts on Drift.

The funding rate overall is positive, meaning that longs pay short more often."}},{"id":"kYmK6UsUf7","type":"paragraph","data":{"text":" \n\nTherefore, the vault earns extra fees by holding short positions."}},{"id":"43MBQYna9l","type":"image","data":{"caption":"","withBorder":false,"withBackground":false,"stretched":false,"file":{"url":"https://pbs.twimg.com/tweet_video_thumb/Ge6-evpW8AA80RF.jpg"}}},{"id":"-wRK9_q-3p","type":"header","data":{"text":"That's a Wrap!","level":2}},{"id":"whW9Mrx_wm","type":"paragraph","data":{"text":"If I've done my job well, you should now be able to explain this to someone else.

Give it a try!\n

APY for Vectis' Navigator Vault is currently boasting a whopping 118%! \n\nIf you like what you read, head over to their site or Drift's vault page to deposit.\n

Check out my articles on X and @AccessProtocol

Thanks for reading folks,\n
ChefG over and out."}},{"id":"fx3GRxrdYO","type":"image","data":{"caption":"","withBorder":false,"withBackground":false,"stretched":false,"file":{"url":"https://pbs.twimg.com/media/Ge7Huk2W4AAljRM?format=jpg&name=900x900"}}}],"version":"2.30.7"}