Contract players: In debt from the moment they open a position
On JLP, the user's counterparty is the platform itself. When traders seek to open a leveraged position, they borrow tokens from the pool and are fed prices directly by the oracle. This model is also known as "jointly opening a casino", that is, users make money and the platform loses money.
The JLP pool supports five assets: SOL, ETH, WBTC, USDC, and USDT. The contract supports leverage multiples of 1.1x-100x. The relevant liquidity is borrowed from the JLP pool. After closing the position, the trader obtains profits or settles losses, and returns the remaining tokens to the JLP pool.
Taking long SOL as an example, assuming that the price of SOL is $150, a 5x leverage is opened, that is, 5 SOLs are borrowed from the pool, worth $750. If the price of SOL rises to $160 and the position rises to $800, the trader will close the position with profit. After closing the position, the trader needs to return the initial $750 principal, with a total profit of $50. However, for the platform, since SOL has risen at this time, the principal price is less than 5 SOLs, so the platform's U-based funds remain unchanged, while the currency-based funds are in a loss state.
If the SOL price falls to $140, the position is only $700, and the trader stops the loss and closes the position, so the trader needs to return the remaining $700 assets to the platform and pay an additional $50. As SOL falls, the amount of SOL corresponding to $50 increases, the platform's currency-based funds are in a profitable state, and the U-based funds remain unchanged. Similarly, shorting SOL requires borrowing stablecoins.
The biggest difference between JLP and general perpetual contracts may be that the latter may have negative rates. In order to make the price of perpetual contracts close to the spot price, the platform will subsidize the interest rate, but in the case of JLP, there is no platform subsidy.
Regardless of whether it is a profit or a loss, the opening capital comes from the JLP platform. Therefore, whether it is long or short, from the moment the position is opened, the trader is in debt to the platform. According to the JLP Pool page, the current APR of JLP is 72.47%, but the data is updated once a week and is different from the actual income.
