Now that we've covered all the concepts, let's make it a bit more exciting with a real-life example of a trade on Jupiter Perpetuals!
For a step by step guide on how to trade on the Perps dashboard, click here.
Imagine a trader wants to open a 2x long position on SOL. Here’s the setup:
- Position size: $1000 USD
- Collateral: $500 USD worth of SOL (this is what the trader deposits)
- Borrowed amount: $500 USD worth of SOL from the liquidity pool (basically borrowing to leverage the position)
The Setup:
- Initial position value: $1000 USD
- Initial deposit: $500 USD
- Borrowed amount: $500 USD
- Leverage: 2x
- Initial SOL price: $100
- Utilization rate: 50% (just the percentage of tokens borrowed vs. available in the pool)
- Borrow rate: 0.012% per hour
- Position opening fee: 0.06% * $1000 = $0.6
What Happens Next?
The trader holds the position for 2 days (48 hours) while the price of SOL appreciates by 10%! Let’s see how this impacts things:
- Final position value: $1100 USD (because SOL price went up to $110)
- Final SOL price: $110
- Position closing fee: 0.06% * $1100 = $0.66
Calculating the Borrow Fee:
Now, the trader has to account for the borrow fees they accumulate over the two days. Here’s how the borrow fee works:
- Hourly borrow fee: (Tokens borrowed / Tokens in the pool) * Borrow rate * Position size This is calculated as: $500 (borrowed) / $1000 (total in pool) * 0.012% * $1000 = $0.06 per hour
- Over 48 hours, the total borrow fee is: $0.06 * 48 = $2.88 USD
Final Profit:
Let’s crunch the numbers! Here’s how the trader’s final profit works out:
- Final position value: $1100
- Initial position value: $1000
- Borrow fee: $2.88
- Opening fee: $0.6
- Closing fee: $0.66
So, the trader’s final profit after the 2-day trade is:
$1100 - $1000 - $2.88 - $0.6 - $0.66 = $95.86 USD
Ta-da! The trader made a neat $95.86 profit from this trade! Simple as that!