MM
Jungle Finance
Jungle Finance, founded by David Holt (@IDrawCharts), is a novel platform built to mesh “the best of both worlds” in regard to yield functionality within crypto markets. Jungle enables users to generate yield while simultaneously participating in governance, lending tokens out, and much, much, much…. much more.
When a user deposits an SPL token into Jungle’s auto-compounding vaults, this token is then “split” into two separate tokens, the J-TOKEN, and the I-TOKEN. The I-TOKEN will carry an expiry date attached to it, representing the rights to yield accumulated on the token up until the set expiry date (users will choose their expiry date upon deposit). The J-TOKEN will represent the tokens “non-productive value” such as governance, and will not carry any expiry date rendering it fungible regardless of expiry date set at time of initial deposit. These two tokens will be traded within their own irrespective markets, allowing them to be speculated on independently of each other.
The action of splitting tokens in such a manner empowers users to sell their I-TOKEN up front to receive their calculated yield value instantaneously, or conversely, sell their J-TOKEN up front without surrendering their rights to yield. Users are able to deposit SPL tokens into Jungle and mint their corresponding I and J tokens, or, redeem their SPL token by amalgamating equal portions of I and J tokens at any time. These measures guarantee the secondary market for these tokens are kept aligned by arbitrageurs.
APY and Rate Depletion Throughout Course of Epoch
Within crypto, APY rates tend to differ from traditional financial rates of return, offering stakers rewards upwards of 100,000% on their deposit. Technically, these insanely inflated rates may be accurate, however not sustainable over the course of the staking period. A common formulation that platforms utilize for calculating APY rates is to measure the accumulated fees collected by the pool in the last 24 hours, extrapolating that figure to a 365 day year, and then dividing by the total liquidity in the pool, among other similar derivations. As deposits lessen throughout the course of an epoch and the market value of the underlying token fluctuates, this rate is bound to deplete into lower figures. Fundamental factors such as supply and demand, inflation, and length of compounding periods will also influence this value throughout the epoch.
$OHM APY fluctuation over time (@shadow)
$SQUID APY fluctuation over time (@sanchopansa)
Liquidity/Epoch Phase Correlation Dynamic Presented by Jungle
The mixture of current yield dynamics amongst cryptocurrency when paired with Jungle’s novel staking and trading protocol, offers new opportunities in an unfamiliar market environment. Explained above, each I-TOKEN will carry an expiry date attached to its value, while this expiry date will remain solidified, the APY rate throughout the course of the staking period will remain variable and based on Jungle’s auto-compounding protocol.
This condition presented by Jungle offers a previously improbable free market dynamic, and a new edge for arbitration. Under the assumption APY rates will deplete over time, fashioning inflated rates at the instance of a new epoch, the division of liquidity between I and J token markets will be predictably unbalanced. While new epochs initiate for different tokens, their APY rates will trade at attractive rates, with users being able to buy/sell the rights to these rates within the I-TOKEN’s respective market. As liquidity is driven into the I-TOKEN market, liquidity will inversely be siphoned out of the corresponding market for that token’s J portion. Theoretically, this dynamic will present a market in which J-TOKENS are traded at values less than those decided by major CEXs and DEXs. As time dwindles towards the end of an epoch, these rates will begin to stabilize and liquidity will reactively balance in both I and J markets, settling the value of the J-TOKEN at its widely accepted market price.
https://raydium.gitbook.io/raydium/?q=
https://support.exodus.com/article/1523-what-is-apy#find-apy
https://medium.com/@JungleDeFi/introducing-jungle-finance-35ef5ead8638
