Weekly Risk Report | Sunday, July 7

Introduction

This weekly risk report by Chaos Labs provides a concise overview of key metrics and insights, including trading activity, market performance, and risk analysis, to keep the Jupiter community informed about the protocol’s health.

Summary

  • Markets have decreased over the past week and month. However, Jupiter’s performance has been stable, with slightly reduced volume.
    Despite the market trend, the JLP pool’s AUM continues to grow in notional and token terms.
  • Due to the long skew of OI, traders have recently lost and reduced JLPs’ exposure to long tokens, leading JLP to outperform the JLP index and the market. On the contrary, in a bullish cycle, JLP would underperform comparing the index and market due to high impermanent loss, as i.e. happened between 14/11/2023-16/06/2024, where SOL, BTC, and ETH have risen by 183%, 182%, 174%, respectively, while JLP underperformed by 57%.

Protocol level

JLP Pool

Despite the market dropping by ~5% over the past week, there was an increase in the TVL, derived from an increase in the amount of tokens deposited in the pool:

  • USDT: 13%
  • USDC: 10%
  • WBTC: 6%
  • SOL: 4%
  • WETH: 2%



There has been no significant change to the pools’ distribution recently.

Utilization was pretty stable recently, with SOL at approximately ~50%, WBTC at ~40%, WETH at ~30% and stables at ~10%.


Volume

Volume was relatively slightly moderate on Jupiter in the past week compared to previous weeks, averaging $330M per day, compared to $355M on average in the weeks prior.

SOL is the most dominant market on Jupiter, comprising ~85% of protocol volume in the last week.

Unique Daily Users

Jupiter reached a peak of nearly 8,000 unique daily users on the most active day. Recently, it ranged between 2,000 and 5,000.

Realized PnL

Last week, there were no large profits, which reflects drawdowns for LPs—as the market generally decreased during that period, with the long skew of OI, this is what’s expected.

Profitable Traders this week

Highlighting traders with either significant net profits or net profit filtered for traders with a win rate of> 80% and more than ten trades. We will look deeper into their trading patterns and revert on this next week.

According to net profit:

Filtered for win rate and number of trades:

Market Level

OI Distribution

Generally, traders continue to have a strong bias for long positions. There’s currently no expectation or reason for that to change.

SOL:

BTC:

ETH:

Price Impact Histogram

Price impact and trading fees are very competitive on Jupiter, with the median trade paying just 7 bps across all markets. In the SOL market, the P99 trades pay 10 bps, while BTC and ETH markets still pay 7 bps.

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, large and very cheap liquidity, reaching up to approximately $100M depending on utilization, could be available at any given moment. This significant liquidity, combined with low fees, could exacerbate the risks of manipulation and other exploitative behaviors.

SOL:

BTC:

ETH:

4 Likes

Thank you so much for this work of synthesis using first-hand data. I hope you will continue to publish this every week :slightly_smiling_face:

3 Likes

Thank you for sharing. I thinks its important to know this info. tbh it makes me more Bullish on $JUP!

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