Volatility in the capital markets has long driven financial engineers to fashion new forms of managing risk. The same is true in crypto.
With perpetual swaps and other derivative instruments long available to investors, the crypto market is now producing more sophisticated on-chain offerings such as Dopex, and Lyra, which deal in options and build on Ethereum Layer 2s,
Now a new project called JonesDAO, which bills itself as offering one-click access to institutional grade options strategies, is jumping into the fray. It raised an astonishing $52M in 24 hours on Jan. 29, underscoring the demand for sophisticated instruments in a market that’s teetering on the edge of bear territory. (Options enable investors to preset prices for buying securities).
The ETH vault has closed as of Jan. 31 and is offering an 11.51% APY on the $3M worth of the token users have deposited, according to the JonesDAO website. The gOHM vault is still open and Jones has yet to display an APY for depositors though $2M of the token has been deposited.
At a high level, Jones offers set-and-forget asset strategies for various assets. According to the project’s documentation, the protocol’s primary vaults will provide risk-averse investors access to stable yield in all market conditions.
Jones will also deploy vaults for users with more appetite for risk. Jones added what the project called a “twist” to its token sale. After allocating 60% of JONES tokens allocated for the public at a fixed price of $7 to people on the whitelist with a cap of 2.16 ETH, the sale opened up to the public.
The sale would raise roughly 20,200 ETH in total, but the twist came when the project actually returned 15,200 ETH to people who invested in the second round. “The purpose of the twist was to make token distribution as fair as possible, eliminate incentives for bots, scripts, and sybils, to ensure fairness to everyone who succeeded and failed to deposit in the first sale, and to those who didn’t deposit because it had sold it,” said the project in their Substack.
The JONES token declined 20% to $15.23 in mid-morning trading U.K. time on Feb 1, according to CoinGecko. The token will be used in governance, and also incentivize liquidity in jAsset/Asset pools. Jones will issue jAssets to represent deposits in its vaults. With deep liquidity, users will be able to trade directly out of their jAsset position any time. For example users will be able to exchange jETH for ETH at a 1-to-1 basis.
JONES will also have a locking functionality like Curve Finance, commonly known as “ve” or voting escrow tokenomics, which will allow those who lock the tokens to dictate where the JONES rewards go as well as earning a portion of the fees the protocol charges on its strategies.
Jones charges 2% on the value locked in its smart contracts and a 20% performance fee on the yield generated through vaults, according to the protocol’s documentation. This structure mirrors a traditional hedge fund, which follows the 2 and 20 model (2% on assets under management and 20% on profits).