• Smart contract risk Exposure to vulnerabilities in deployed smart contracts. The strategy involves providing liquidity to Jupiter smart contracts on Solana. These contracts have been deployed at scale and have undergone independent audits, but exposure to vulnerabilities in deployed smart contracts remains a risk factor. Controls:
    • Deployment limited to audited and widely used contracts with established operational history
    • Independent third-party audits conducted for each Structured contract release
    • Ongoing internal code reviews and upgrades
    • Multiple backup execution pathways for critical operations
  • Liquidation risk The strategy employs short positions in SOL and ETH to offset non-BTC exposure from the JLP basket. Liquidation may occur if the BTC/SOL or BTC/ETH ratio declines by approximately 45% before rebalancing. Since the perpetual listing of BTC on Binance in 2019, the largest recorded weekly decline has been 33.52%, which is below this threshold. Controls:
    • Automated rebalancing triggers at conservative thresholds
    • Flexible deployment ratios to balance risk and yield:
      • 30/70: liquidation threshold ~45% price decline
      • 40/60: liquidation threshold ~66.6%, yield reduced by ~14% compared to 30/70
      • 50/50: no liquidation risk, yields reduced by ~28% compared to 30/70
    • Insurance fund provisions to buffer potential liquidation losses
    • Geographically distributed infrastructure to mitigate operational concentration
  • Exchange risk Reliance on centralized exchanges for hedge execution introduces counterparty risk, including the risk of exchange insolvency. Controls:
    • Principal funds secured off-exchange via Ceffu custody
    • Only hedge collateral is transferred to Binance for active positions
    • Use of top-tier exchanges with established track records
    • Ongoing monitoring of exchange health indicators
  • Funding rate risk Unfavorable funding rate environments during periods of market stress may reduce net strategy returns. Controls:
    • Funding rate dynamics incorporated into strategy risk models
    • Position sizing adjustments during adverse conditions
    • Parameters adjusted dynamically to mitigate prolonged negative funding environments
  • Liquidity and withdrawal risk The liquidity pool can support withdrawals in the hundreds of millions of USD with slippage of approximately 0.3%. Withdrawals significantly larger than this may result in higher slippage, which can be mitigated through withdrawal scheduling mechanisms and, if required, the application of withdrawal fees.

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Risk Monitoring

  • Automated position monitoring and real-time collateral sufficiency checks
  • Redundant monitoring systems with global distribution
  • Automated failover mechanisms
  • Multi-signature authorization for critical operations
  • Regular infrastructure audits and testing

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Asset Strategy

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Off-exchange custody

30% of deposited WBTC is held in custody with Ceffu for hedge collateralization. Transfers between custody and exchanges occur only when required for funding obligations or realized P&L.

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On-chain allocation

70% of deposited WBTC is deployed in JLP, providing transparent balance verification and visibility of asset allocation. For a full description of allocation and workflow, see JLP BTC Neutral Strategy.
DISCLAIMER: This document is for informational purposes only and does not constitute an offer to sell or solicitation to buy any security. Investment in cryptocurrencies and DeFi products involves significant risks, including potential loss of principal. Past performance does not guarantee future results. Investors should conduct their own due diligence and consult financial advisors before making investment decisions.