Recently, I’ve been diving into on-chain yield strategies, and during my research, I came across two protocols on Solana that are gaining traction fast: Knightrade and Neutral Trade.
Key Stats:
Knightrade
TVL: $56.8M
Twitter Created: Oct 2024
Twitter Followers: 4,416
USDC Delta Neutral Vault APR: 38%-55%
SOL Delta Neutral Vault APR: 20%
Neutral Trade
TVL: $52.68M
Twitter Created: Sep 2024
Twitter Followers: 3,554
USDC Delta Neutral Vault APR: 4%-43%
This got me curious—what exactly are these protocols doing to generate delta-neutral yield? While they don’t explicitly disclose their full strategies (for obvious reasons), both seem to follow a similar approach.
A major component of their strategy revolves around JLP’s native yield, which currently sits at ~26.75% as of February 24, 2025. The basic idea is to leverage JLP to amplify this yield.
Here’s a simplified breakdown of how it works:
1. Users deposit USDC.
2. The USDC is swapped for JLP (Jupiter Perpetuals Liquidity Provider Token).
3. The JLP is deposited into Drift as collateral.
4. More USDC is borrowed and swapped for additional JLP.
5. Selected perpetual short positions are taken to hedge JLP market exposure.
6. Yield is distributed hourly to JLP holders.
Boom—high yields! But of course, the devil is in the details. The key to sustaining this strategy is continuously monitoring stats and adjusting leverage accordingly.
Next, I’ll dive deeper into the fundamental protocols they leverage: Jupiter, Drift, and potentially more.
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