Summary
In the high-frequency and volatile landscape of DeFi derivatives, managing risk dynamically across Jupiter’s expanding perpetuals infrastructure and evolving parameters has emerged as a mission-critical operation. Chaos Labs introduces the Risk Oracle to Jupiter, marking the first integration of its kind on the platform. This initiative aims to deliver scalable, near-real-time risk parameter adjustment capabilities through the combination of automated analytics and on-chain execution. This initiative reflects our continued commitment to operational excellence, safety, and the responsible scaling of DeFi derivatives infrastructure.
Motivation
Today, the process of adjusting risk parameters is largely manual. In a market structure where capital efficiency must be constantly balanced against risk mitigation, especially with rapidly changing open interest and exposure, the current latency in implementing risk responses poses a significant challenge.
Introduction to Risk Oracles
Risk Oracles represent a leap forward in automating the process of managing and updating risk parameters. Conventional methods of identifying and mitigating risk in real time are often hindered by the delay between risk signal detection and the implementation of protective measures.
This latency is especially problematic in the context of perpetual markets, where leverage, position sizing, and volatility interact in real time. Risk Oracles act as the connective tissue between the Chaos Labs Cloud’s analytical capabilities and on-chain enforcement, facilitating timely, programmatic updates.
Edge Risk Oracle Dashboard
Operational Mechanics of the Jupiter Risk Oracle
Housed within the Chaos Cloud, the off-chain component continuously ingests and analyzes market data, such as fluctuations in open interest, volatility shifts, and anomalous trading behaviors. Upon detecting predefined risk thresholds, the system simulates updated parameter configurations of new open interest caps, that optimize for both capital efficiency and safety. These adjustments undergo rigorous internal validation before being proposed for on-chain enactment.
OI Caps Implementation
As part of the initial rollout, the Jupiter Risk Oracle will support the dynamic adjustment of OI caps. These updates will be manipulation-aware and bounded within conservative scaling limits to ensure system stability.
Observability & Transparency
All risk oracle updates, past and present, can be viewed publicly on the Edge Oracle Dashboard, offering full visibility into the underlying decision logic, parameter history, and current system state.
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this forum post.
Copyright
Copyright and related rights waived via CC0