Perpetual Funding Markets
Generating Stable Returns from Basis Premiums on BTC, ETH, BNB & SOL
Last updated
Generating Stable Returns from Basis Premiums on BTC, ETH, BNB & SOL
Last updated
Delta Money utilizes a systematic derivatives-based strategy to generate yield on crypto-denominated deposits — specifically in BTC, ETH, BNB, and SOL — by capturing the positive funding rates in perpetual futures markets across major centralized (CEXs) and decentralized exchanges (DEXs). This opportunity arises from a structural feature of crypto markets: perpetual contracts frequently trade at a premium to spot, creating a basis that rewards traders holding short perpetual positions.
Delta executes this strategy by shorting perpetual futures while simultaneously holding the corresponding spot assets. This approach allows Delta to earn the funding payments made by leveraged long traders, while maintaining flexibility to retain partial net long exposure when market conditions support positive convexity. The strategy does not require strict delta-neutrality and is managed to balance yield capture with prudent directional exposure. All positions are sized and collateralized under a robust risk framework to ensure liquidity, solvency, and capital efficiency.
Over the past 12 to 24 months, funding rates on major perpetual contracts for BTC, ETH, BNB, and SOL have averaged 8% to 15% annually, depending on market sentiment, asset volatility, and exchange-specific dynamics. During periods of heightened bullish sentiment and retail leverage, funding rates have exceeded 20% annualized, while during neutral or bearish periods, yields may compress to the 3% to 6% range. Based on Delta’s diversified execution across assets and venues, the expected average annualized return from this strategy is estimated at 7% to 12%, net of trading costs and platform fees.
Delta continuously evaluates funding rate conditions, market volatility, and venue-specific risks to optimize execution across platforms and protect capital. Importantly, while funding income is distributed to sDUSD holders, any capital gains resulting from favorable price movements in the underlying crypto assets are not passed through. Instead, these gains are allocated to Delta’s Insurance Fund, which serves as a risk buffer to protect users in case of adverse events, liquidation losses, or exchange failure scenarios.
All net funding revenue, after deducting transaction costs and risk-adjusted margin requirements, is distributed directly to sDUSD holders. This model enables holders of sDUSD — Delta’s synthetic, USD-pegged stable instrument — to earn realized yield sourced from crypto derivatives markets, without taking on directional crypto exposure themselves. Returns are accrued on a daily basis, and are accompanied by transparent reporting, ensuring traceability of performance and compliance with institutional accounting standards.
By systematically capturing non-directional yield from crypto derivatives markets and clearly segmenting capital gains into the Insurance Fund, Delta delivers a risk-aware, institutional-grade yield offering to its USD stablecoin holders. This strategy complements Delta’s broader suite of fiat and crypto yield products, reinforcing its position as a full-stack platform for passive yield generation, with robust risk controls, transparent mechanisms, and infrastructure designed for institutional capital at scale.
