Why we invested in Jet Protocol

Introduction

Primer on crypto borrow/lending

  • A customer borrows an asset X at a 150% liquidation ratio, requiring a minimum $1.50 of collateral value for every $1 of X borrowed.
  • If collateral value falls to, say, $1.30, liquidation occurs. A third party liquidates the position (sells the collateral, usually at a small discount) to cover the original $1 borrowed, takes a hefty fee for the trouble, and returns the remainder to the borrower.

Trends in DeFi lending

Source: DappRadar and Defistation.io
Source: DappRadar and Defistation.io

Problems in DeFi

  • Poor price discovery of complex derivative assets
  • Disorderly liquidations on loans
  • Slow trade execution which limits trading strategies

Solana as a solution

Source: https://twitter.com/Solana_Mates/status/1382692005659168782

Jet Protocol

https://github.com/wilbarnes/solana-structured-products
https://github.com/wilbarnes/solana-structured-products

Solving issues in DeFi

All roads lead to Jet

Source: Compound, Aave, Venus, Cream

Co-pilot: simplifying DeFi

  • Look at the market (current APYs etc), check current asset holdings and financial position and recommend a good sequence of transactions.
  • Will be opt-in and users can read through the recommendations for oversight or learning purposes before confirming.
  • Once confirmed with the click of a button, the back-end will execute a number of trades depending on recommendation.
  • May deploy to highest APYs based on deposits, recommend whether to deposit assets or repay debt to bring collateralization back in the green.
  • Co-Pilot is a manifestation of a key belief of the team: How can Jet help in maintaining financial wellbeing of users?
  • Long term will be a fully automated AI function on top of Jet.
  • Co-pilot can appeal to users of all experience levels and can automatically form complex deal structures without users building themselves. It’s even handy for power users to show strategies they may have missed. No matter what your workflow is, Jet wants to make the process as easy as possible.
  • Given the speed of the underlying infrastructure, there is more certainty in execution and recommended actions will only be executed if all trade sequences are executed.
  • Non-invasive and opt-in. Co-pilot would only suggest or “kick-in” e.g. if in duress. Or can opt-in and receive suggestions depending on market conditions. As you get closer to the collateralization limit, Co-Pilot will alert users more and more to ensure they are aware of the danger.
  • In the future, in times of stress Co-Pilot can recommend a set of actions to bolster a position (e.g. swap SOL for USDC to pay debt). The idea is to make sure the user is aware of their situation pre-liquidation, to avoid the fees and inconvenience of liquidation, and give them as many options as possible to avoid it. Few protocols have the user’s financial wellbeing so prioritized nor offer such control over their finances. No more need users be at the mercy of slow pricing updates and chaotic liquidations.
  • Co-pilot essentially speeds up the user’s ability to rectify negative situations. When markets are moving against you, fast, many users may not want to manually dig their way out. There is an element of stress and a potential for human error. In the future there are multiple possible ways Co-Pilot could simplify the situation: potential for an “Eject” function to clear out of all positions immediately (try doing that on other protocols), auto rebalancing, alerts for deposit, strategic sell-offs etc. In the future users can authorize Jet to do these automatically.

Team

Governance first approach

Tokenomics

  • The fixed total supply of JET tokens is 1,700,000,000.
  • Initial Circulating Supply: 156,257,200 JET.
  • 25% of tokens to team & advisors, 0% unlocked at the 12 month cliff, and the rest vesting linearly over 24 months.
  • 15% of tokens to seed investors, 0% unlocked following a 12 month cliff, with the rest vesting linearly over 24 months.
  • 10% of tokens to follow-on investors, 0% unlocked following a 12 month cliff, with the rest vesting linearly over 24 months.
  • 3.06% of tokens to Ascendex IEO + trading capital for market maker, 100% unlocked at TGE.
  • 25.47% of tokens are under control of the DAO, 3% unlocked at TGE and the rest vesting linearly for 24 months. The rationale for lower % TGE unlock here is to prevent governance attack of DAO tokens. 21.47% of tokens are reserved for direct project contributors, the “dev fund”, 25% unlocked at TGE and the rest vesting linearly for 24 months.

Conclusion

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A team of former consulting, Wall Street, private equity, government, and corporate veterans accelerating the blockchain revolution

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A team of former consulting, Wall Street, private equity, government, and corporate veterans accelerating the blockchain revolution

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