JLP Quick Review

19 Jun 2024

Let’s dive into the details of Jupiter Liquidity Providers (JLPs) and explore how they contribute to the trading ecosystem:

  • Role of JLPs:JLPs are essential for maintaining liquidity in the perpetual trading market. They ensure there’s enough liquidity available, allowing traders to execute their strategies effectively.
    • By providing liquidity, JLPs enable Jupiter to offer its trading services without holding massive amounts of liquidity themselves.
    • In return, JLPs receive a significant portion of the trading fees.
  • Becoming an LP:To become a Liquidity Provider (LP), you need to contribute assets or tokens to the Jupiter Liquidity Provider Pool (JLP Pool).
    • JLP tokens represent your share in the pool.
    • Any asset traded on JUP can be used to buy into JLP, but keep in mind there are associated fees.
    • You can learn more about obtaining JLP tokens in the “How To Get JLP” section.
  • Rewards and Earnings:75% of perpetual trading fees go into the JLP pool, which is then distributed among JLP holders. This distribution reflects as an increase in the JLP token price.
    • The earnings form an Annual Percentage Rate (APR), and higher trading volume generally leads to better returns for JLP holders.
  • Advantages of the JLP System:Unlike traditional staking or yield farming, JLP holders don’t need to actively stake or harvest yields.
    • APR earnings are automatically embedded within each JLP token.
    • JLP tokens are SPL tokens, making them easily transferable and tradable within the Solana ecosystem.
    • Automated Market Maker (AMM) pools can be set up for trading JLP tokens.

JLP UI Overview:The JLP UI provides essential features:

  • 1 APYEarn Tab: Allows users to deposit into the JLP Pool and earn passive fees from perpetual trading activities.
  • 2 APY: Shows the current yield trajectory for holding JLP tokens.
  • 3 Trade: Enables users to trade, buy, or sell JLP.
  • 4Total Value Locked (TVL): Represents the total value of pool assets at current token prices.
  • 5Token Selector: Choose the token you want to trade or receive.
  • 6 Token List: Displays the tokens currently held in the JLP pool.
  • 7 Pool Size: Shows the current size of each token’s pool.
  • 8 Current / Target Weightage: Compares the current weightage to the target weightage.
  • 9 Utilization: Measures how the pool’s assets are being used.
  • 10 Estimations and Fees: Provides estimated fees for trading specific tokens and the corresponding JLP to be received.
  • 11 JLP Price & Total Supply: Displays the current JLP Price and Total Supply, calculated by dividing TVL by Total Supply.

Remember, JLP is a liquidity token for the Jupiter Perpetuals platform, while JUP serves as the governance token for the JUP DAO

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