JLP and Neutral: A New Exploration of High-Yield Encryption Asset Investment Strategies

In the cryptocurrency market, JLP (Jupiter Perpetual Liquidity Provider Token) has become one of the most sought-after quality assets. Since its launch, JLP has shown impressive performance, with a threefold increase in value within a year and a maximum drawdown of only 30%, while its fund size has exceeded 1 billion USD, demonstrating strong market appeal.

The core advantage of JLP lies in its diversified sources of income. As a perpetual contract liquidity provider token, JLP holders essentially play the role of the counterparty in contract trading. In the long run, contract traders often find themselves in a losing position, which brings stable income to JLP. Additionally, 75% of the trading fees from Jupiter perpetual contracts are returned to JLP holders, ensuring that the annualized return on JLP usually stays above 30%, and sometimes even reaches 50%.

The asset composition of JLP is also a major source of its appeal. It consists of 47% SOL, 8% ETH, 13% BTC, and 32% USDC, providing a diversified investment portfolio that offers a certain degree of risk diversification while maintaining exposure to the risks of encryption assets. This characteristic is particularly prominent during the strong price increase of SOL in 2024.

However, JLP is not completely risk-free. Its potential risks mainly come from two aspects: first, contract traders may profit in extreme short-term market conditions; second, the price of encryption assets may weaken in the long term. In response to these risks, some innovative solutions have emerged in the Solana ecosystem.

A certain institutional-level on-chain strategy hedge fund has proposed a novel investment strategy: users deposit USDC, exchange it for JLP, and then use the JLP as collateral to borrow USDC in a lending protocol, subsequently exchanging it back for JLP. At the same time, they short the corresponding proportion of encryption assets through perpetual contracts to achieve risk neutrality. This strategy has currently attracted over $12 million in total locked value, with an annualized return exceeding 15%, and the maximum drawdown controlled within 2%.

For ordinary investors, executing such complex strategies on their own poses numerous challenges. Short selling hedges may face the risk of liquidation and abnormal funding rate risks, while the lending part may encounter losses due to long-term interest rate inversion. In contrast, institutional-level hedge funds have 24-hour monitoring teams, extensive risk management experience, and ample contingency plans, enabling them to better manage various systemic risks.

In the Solana ecosystem, a hedge fund project on a certain chain is collaborating with the Chinese community for promotion, gaining some endorsement. This project not only offers a neutral strategy for JLP but also includes multiple income strategies, including fee arbitrage from a certain derivatives trading platform. It is worth noting that this project also has a points system, presenting potential token airdrop opportunities, providing users with additional investment motivation.

This project originally originated from the Solana Radar hackathon and has now developed into a considerable emerging protocol, with a total locked value of nearly $36 million, creating nearly $2.5 million in earnings for users. Its founding team has a prestigious background, coming from top global investment banks and hedge funds. In June of this year, the project also announced that it secured $2 million in financing, with investors including a well-known encryption trading company and several participants from the Solana ecosystem.

For investors interested in exploring these types of strategies, it is important to recognize that not all strategies are neutral in risk. Some strategies labeled as "Directional" may experience significant fluctuations with market conditions. Before participating in any investment activities, one should fully understand the associated risks and make prudent decisions based on their individual risk tolerance.