At its core, JLP is the engine that drives the Jupiter Perpetuals exchange.
It’s where liquidity providers (LPs) pool their assets – similar to an index fund – with tokens such as USDC, USDT, SOL, wBTC, and ETH, to support leveraged trading.
In return, LPs earn a share of the trading fees, creating a win-win dynamic between traders and providers. The current yield is 14% APY.
Currently, JLP has a total value locked of US$1.6B, consisting of approximately 47% SOL, 10% ETH, 12% WBTC and 33% in stablecoins, with a cap of US$1.75B.
The Role of JLP in the Ecosystem
JLP isn’t just a static pool of funds – here’s how it works:
- Traders borrow assets from the pool to open positions with leverage on Jupiter Exchange
- They pay fees to the pool based on the assets borrowed, ensuring that the LPs are compensated for their contributions
This dynamic structure eliminates the traditional funding rate model and instead introduces hourly borrowing fees, keeping the system fluid and equitable.
Participating as a Liquidity Provider
If you are keen to participate in providing liquidity to JLP, you can add liquidity by acquiring JLP tokens, which represent your stake in the pool and can be obtained via Jupiter Exchange.
When you contribute to JLP, your assets are repriced in USD, reflecting the overall Total Value Locked (TVL) in the pool.
How JLP LPs Earn Yield
As an LP, your yield comes from multiple sources:
- Trading Fees: Every time a trader opens or closes a position
- Borrowing Fees: Hourly charges on leveraged trades
- Spot Trading Fees: For standard asset swaps
- Minting and Burning Fees: Linked to JLP token transactions
Of the total fees collected, 75% is reinvested directly into the pool, increasing its value over time, the remaining 25% supports Jupiter’s operations, ensuring a sustainable ecosystem.
What are the risks associated with JLP?
Every opportunity comes with its risks, and JLP is no exception, participating in a liquidity provider for JLP has the following risks:
- Market fluctuations: In bull markets, holding JLP may underperform compared to simply holding individual tokens like BTC or SOL, since you are also holding stablecoins as part of the pool holdings
- Trader profits: When traders profit, the pool may lose value, as payouts are drawn directly from its assets
- Volatility: The mix of stablecoins and crypto can lead to fluctuations in the pool’s overall value
Despite these risks, the system has built-in safeguards, such as fee adjustments, to manage potential imbalances.
Using JLP for a long-term investment
JLP isn’t just about short-term gains—it’s about building a sustainable foundation for liquidity and growth.
The price of JLP over time has seen a consistent uptrend.
With every fee reinvested, your stake in the pool gains value, creating a virtuous cycle of appreciation.