6 min read
Jones DAO: An Easy to Use Vault for Everybody
Jones DAO is a yield, strategy, and liquidity protocol with vaults that enable 1-click access to institutional-grade strategies.
Jones DAO is a yield-generating protocol that enables users to access some of the highest returns in the decentralized finance (DeFi) ecosystem through its vaults. These vaults are smart contracts that allow users to deposit multiple tokens with various risk profiles. By utilizing its institutional-grade investment strategies, Jones DAO generates yield on the tokens deposited in its vaults, providing users with an easy and convenient way to maximize their returns. With just one click, users can access the best yields in DeFi without needing active management or locking up their tokens.
There are three main categories of users that Jones DAO is built for:
- Users who want to refrain from actively managing their strategies. These users can deposit their tokens into one of the vaults and let the smart contract handle the rest.
- Users who prefer not to lock their tokens but rather keep them liquid. Jones DAO allows these users to participate in investment strategies without locking up their tokens, which can be especially useful for traders or investors who require access to their funds at all times.
- Protocols that want to earn an additional yield on their treasury positions. Protocols can use Jones DAO vaults to make the extra yield on their treasury positions and optimize their capital efficiency.
When a deposit is made to the primary Jones vault for an asset, a jAsset token is minted to represent the deposit. The depositor can use this token to access liquidity and capital efficiency features. When the depositor wishes to withdraw, the jAsset token is burned, and the yield is returned to the depositor.
One of the critical features of jAssets is their composability, which means they can be used in other protocols. This allows users to deposit their jAssets, which already accrue organic yield, into other protocols such as lending platforms, yield farms, or Automated Market Makers (AMMs). So, for example, users could use their jAsset positions to leverage their vault position, which is the ability to get leverage on an option spread.
The primary goal of Jones Vaults is to generate yield through the use of sophisticated investment strategies. These strategies are designed to maximize returns for users while also providing liquidity and capital efficiency for the DeFi ecosystem. The token accretion of the vaults is denominated in the native vault token, meaning the aim is to accumulate more of that token over time. This allows users to see an increase in their overall holdings and earn a yield on their deposited tokens. There are currently three types of vaults.
One of the key features of the OpFi vaults is their ability to write or sell options. This allows the vaults to generate income from the premiums received from options buyers while potentially profiting from a decline in the underlying asset's price. Additionally, the vaults may purchase call options, which allow for the potential to profit from an increase in the underlying asset's price. Another technique used by the OpFi vaults is pair trading through swaps. This involves simultaneously buying and selling two related assets to profit from the difference in prices. This allows the vaults to generate yield in a market-neutral manner, meaning that they are not exposed to the market's overall direction.
Additionally, the OpFi vaults may use tokens deposited as collateral for perpetual positions. This can allow the vaults to generate yield by borrowing at a lower rate and lending at a higher rate. Finally, OpFi strategies may take advantage of inefficient options pricing across platforms to lock in potential yield through arbitrage. This is done by exploiting price discrepancies between different platforms, allowing the vaults to buy options at a low price on one platform and sell them at a higher price on another platform.
The Metavaults work by taking liquidity provider (LP) positions in various protocols and using some deposited tokens to buy options that provide downside protection. This helps to hedge against potential price declines, while the remaining tokens are used to earn yield through other investment strategies.
The Metavaults perform best during periods of volatility, as the options used to hedge against price declines become more valuable during market uncertainty. This can provide additional protection for users concerned about the potential downside risk of providing liquidity.
In addition to providing a hedge against price declines, Jones Metavaults also allows users to leverage their positions. This is done by using a portion of the deposited tokens to take leveraged positions in underlying tokens, depending on the available liquidity. This allows users to earn higher returns but comes with a higher risk.
Advanced strategy vaults
Currently, Jones DAO offers two advanced strategy vaults: the jUSDC Vault and the jGLP Vault. These vaults are designed to work in tandem to give users superior yield on their deposited tokens. Both jUSDC and jGLP vaults are based on GMX. The jUSDC vault is designed to give users a superior yield on USDC. This vault utilizes a range of investment strategies to maximize profit on USDC, such as lending, borrowing, and options trading. The jGLP vault, on the other hand, is designed to amplify yield on GLP. This vault utilizes a range of investment strategies, such as liquidity provision and token farming.
The JONES token serves multiple purposes: governance, liquidity incentives, and revenue.
Regarding governance, JONES holders can vote on important decisions such as introducing new vaults and strategies, protocol parameter changes, and rewards distribution.
Voting-escrow JONES (veJONES) is a powerful governance tool within the protocol based on the lock and boost models implemented by Curve Finance, Badger, and Balancer. The lock and boost model allows users to lock their JONES tokens for increased voting power within the protocol. In addition, with veJONES, users can vote on gauge weights for jAsset LP staking rewards. Gauge weights determine the distribution of JONES emissions across different jAsset/Asset pools. This mechanism makes the protocol highly efficient in JONES distribution by directing tokens towards high-demand pools and avoiding unused pools.
The Jones DAO fee structure is designed to balance earning a baseline level of compensation for the protocol and be highly incentivized to generate user returns. The protocol makes fees on two fronts: total TVL and the performance of Jones Vaults.
The fees are set at a 2% annual fee on total TVL, which is applied at each epoch. This means that at the end of each epoch, a 2% fee is taken from the total TVL and is used to compensate the protocol for its services. This is a standard fee structure in DeFi protocols and is used to ensure the long-term sustainability of the protocol.
In addition to the TVL fee, the protocol also earns a 20% performance fee on the yield generated by Jones Vaults. This performance fee is used to incentivize the protocol to generate returns for users. The higher the returns, the more the protocol earns in performance fees. This structure, commonly called “2 & 20”, is a standard in DeFi and Traditional finance markets.
Jones DAO is a DeFi protocol that generates yield on deposited tokens through its vaults. It provides an easy and convenient way for users to access the highest returns in the DeFi ecosystem without needing active management or token lockup. Additionally, jAssets are composable, allowing them to be used in other protocols for further yield generation and leverage. Jones DAO is looking to innovate in the DeFi space by making it much easier to use than other protocols.
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