Delta Hedging

Risk Management Across Digital and Fiat Markets

Delta Hedging of Digital Asset Exposure

Delta Money applies a dynamic delta hedging strategy to manage its exposure to digital assets such as Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), and Solana (SOL). These assets, while integral to Delta’s reserve strategy due to their liquidity and capital appreciation potential, introduce significant market volatility. To mitigate this risk, Delta Money maintains an actively monitored hedging regime that adjusts directional exposure in real time, ensuring the financial integrity and peg stability of DUSD across market cycles.

The hedging process involves taking offsetting positions through perpetual futures and derivatives on leading centralized and decentralized exchanges. These venues include Binance, OKX, ByBit, Deribit, Hyperliquid, Apex, and dYdX. Delta Money strategically balances its spot holdings in volatile assets with corresponding short positions in futures markets, adjusting these in response to changing market conditions, funding rates, and realized volatility.

This approach allows the protocol to preserve upside exposure during favorable environments while minimizing drawdowns in adverse conditions.

Under normal market conditions, Delta targets a delta exposure band of ±10%, with a strict cap at ±20% to prevent overextension. The hedge ratio is recalibrated frequently, with risk parameters enforced through automated slippage-constrained execution algorithms and real-time monitoring by the protocol’s Risk & Treasury Committee. This controlled, flexible strategy ensures that net exposure is always in alignment with Delta Money’s broader capital preservation objectives, without sacrificing the ability to capitalize on strategic growth opportunities.

Currency Hedging of Emerging Market Fiat Reserves

In addition to its crypto-native hedging strategies, Delta Money also hedges currency risk associated with fiat reserves held in non-USD emerging market currencies. Specifically, Delta maintains exposure to high-yielding sovereign instruments denominated in the Brazilian Real (BRL) and Kazakhstani Tenge (KZT), which form part of its diversified collateral base. While these assets offer attractive returns, they expose the protocol to foreign exchange (FX) risk against the U.S. Dollar.

To mitigate this risk, Delta implements a comprehensive FX hedging program using a suite of derivative instruments including forwards, currency swaps, futures, and options. These instruments are carefully structured to match the duration and cash flow profile of the underlying sovereign bond holdings, ensuring that currency volatility does not impair the collateral value or jeopardize DUSD’s price stability.

Exchange rate risk is neutralized at the point of DUSD issuance, locking in conversion rates with institutional-grade precision and transparency. The FX hedging strategy is dynamically managed by the Treasury Committee, which continuously assesses macroeconomic conditions, monetary policy developments, and geopolitical risks in relevant jurisdictions.

This ensures that emerging market exposures are balanced for yield optimization while adhering to strict capital preservation standards.

Together, these institutional-grade hedging strategies — spanning both digital and fiat markets — position Delta Money as a stablecoin protocol engineered for resilience, scalability, and disciplined risk management.