Gauntlet <> Jupiter Partnership

Gauntlet is excited to announce our partnership with Jupiter, with a focus on providing risk management and optimization recommendations for their perpetual exchange.

Effective risk management and optimization strategies are pivotal for the long-term functionality and growth of perpetual protocols. Ensuring user safety and operational efficiency requires continuous adjustments across a spectrum of elements, including fine-tuning the weights in the JLP pool, margin and leverage requirements, borrowing rates, and trading fees.

Our objectives will support the Jupiter Perpetual Exchange’s mission through an examination of the protocol’s goals and key mechanisms. This includes:

  1. Conducting an in-depth analysis of protocol operations and settings,
  2. Evaluating the balance between capital efficiency and associated risks,
  3. Developing a strategy for fine-tuning protocol settings,
  4. Identifying metrics for oversight and notifications, and
  5. Offering ongoing suggestions for parameter adjustments.

The aim is to harmonize capital efficiency with protocol risk by tracking essential indicators and guaranteeing protocol adjustments align with changing market conditions.

Services offered by Gauntlet encompass:

  • Custom dashboard development,
  • Monitoring and notifications,
  • Real-time modeling,
  • Dynamic parameter adjustment, and
  • Proactive risk evaluation.

Initially, Gauntlet will conduct a risk evaluation of Jupiter’s perpetual trading platform and develop bespoke risk models. These models will be continuous, providing immediate insights into risk management and actionable guidance on critical risk factors, including:

Parameter Description
Trader Open & Close Position Fees Opening & closing perpetuals position fees
JLP Deposit & Withdrawal Fees Fees related to depositing and withdrawing LP
JLP Spot Swap Fees Swap fees for trading spot assets in the JLP
Borrowing Rate Fees Fees paid by perpetual traders during the life of the position
Asset Target Index Weight Target weight of the asset in the JLP
Max Leverage The maximum leverage of a market
Global JLP AUM Limit The maximum size of a pool
Global Market Open Interest Limits The maximum OI for long and short positions
Max Position Size The maximum size of an account position

Next, Gauntlet will release a dedicated risk management dashboard, showcasing vital risk metrics and utilization data, along with Gauntlet’s parameter recommendations.

Stay updated on the dashboard launch and further partnership news by following both Gauntlet and Jupiter.

About Gauntlet

Gauntlet is an end-to-end solution provider for on-chain market risk management. Founded in
2018, we have experience protecting DeFi protocols throughout market cycles and black swan
risk events. We achieve this via active monitoring of on-chain positions and liquidity to make
regular as well as urgent risk parameter adjustments to keep clients optimized to current market
conditions.

Gauntlet’s platform quantifies risk, runs economic stress tests, and calibrates parameters
dynamically through a joint optimization function. We use agent-based simulation models tuned
to historical and current market data to model tail market events and interactions between
different users within DeFi protocols. As new risk scenarios are observed in the market, we
adjust our methodologies to account for them, leveraging new parameters and risk mitigation
mechanisms developed by our clients. Gauntlet’s methods mature and evolve as the industry
does.

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How does the collaboration between Gauntlet and Jupiter Perpetual Exchange enhance the security and efficiency of the exchange compared to if Jupiter were to manage these aspects independently?

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What specific metrics does Gauntlet consider most indicative of emerging risks in the DeFi space, and how are these integrated into the real-time monitoring ?

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Hey @ToddlerNFT!

Key metrics like liquidity, positions in the protocol, prices, and others will be tracked in our
monitoring system.

  • Price: We monitor large price swings affecting margin position safety, including price depeg, volatility spikes, and asset manipulation costs.
  • New Positions: We scrutinize new positions for activities risking the protocol or requiring intervention, such as utilization alerts, whale movements, concentration risks, and approaching safety limits (e.g., Max Global Short/Long Size, Max Leverage).
  • Liquidity: We observe JLP pool and DEX liquidity for listed assets, noting significant decreases in DEX liquidity.
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  • Hey @ToddlerNFT, as mentioned in the forum post, Gauntlet will utilize our extensive experience in DeFi alongside our platform that quantifies risk, runs economic stress tests, and dynamically calibrates parameters through a joint optimization function. We use agent-based simulation models, tuned to historical and current market data, to model tail market events and interactions between different users within DeFi protocols.
  • As new risk scenarios emerge in the market, we adjust our methodologies to incorporate them, leveraging new parameters and risk mitigation mechanisms developed by our clients. Gauntlet’s methods mature and evolve as the industry does
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Love the breakdown of everything y’all are planning to do. Security should always be a top priority and knowing how serious you and Jup are by going into this partnership should help all users feel safe using perps!

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Great move from Jupiter to get into a partnership with Gauntlet. This will increase the capability maturity of the financial app. I think the methodical approach is absolutely needed to prevent unintended runtime issues.

Question: Does your work also include e2e testing of the app in quality assurance and product environment? And are development tests occurring beforehand, in which communication endpoints to third party are mocked?