Risk

As an ERC-20 token tracking JLP, HedgePlus carries several risks that investors should be aware of:

Bull Market Performance

During bull markets, HedgePlus may underperform JLP. This is due to HedgePlus potentially holding short positions in volatile assets. While this risk is relatively small, it's noteworthy that HedgePlus token might experience slower growth compared to JLP in bullish conditions.

Discrepancy in Trading Position Size and Real-time Volatile Asset Scale

Jupiter Perpetuals experiences constant trading activity, causing the scale of volatile assets in the JLP pool to fluctuate continuously. The hedging positions in the trading account cannot be adjusted instantaneously to match these real-time changes. Consequently, there may be slight deviations between the actual hedge position size and the ideal size.

JLP Profit and Loss Risk

The PNL (Profit and Loss) of traders engaged in perpetual trading on Jupiter Perpetuals impacts the JLP pool:

• If traders generate net positive PNL, losses are drawn from the JLP pool to compensate traders.

• Conversely, if traders' PNL is net negative, gains are deposited into the JLP pool, benefiting LP holders.

JLP Exchange Risk

JLP may suspend minting and redeeming operations when asset ratios deviate significantly from target levels.

JLP Asset Weight Deviation

Current asset weights in the JLP pool can deviate from their target weights by a maximum of 20% of the target weight value.

Example:

• If the target weight for USDC in the JLP pool is 26%, the current weight may fluctuate between 20.8% (-20%) and 31.2% (+20%).

• This means USDC cannot be deposited into the pool if the current weight exceeds 31.2%, and it cannot be withdrawn if the current weight falls below 20.8%.

Implications: In the event of a black swan event causing JLP assets to de-peg, the maximum potential loss is calculated as: target weight * 1.2

Risk Mitigation Strategies

While these risks are inherent to the HedgePlus model, the strategy's design aims to mitigate overall portfolio risk through diversification and dynamic hedging. Investors should consider these factors alongside the potential benefits when evaluating HedgePlus as an investment option.