Digital Assets
Digital Assets Backing
Last updated
Digital Assets Backing
Last updated
Delta Money maintains strategic exposure to blockchain-native digital assets — including Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), and Solana (SOL) — as part of the collateral backing of DUSD. These assets are held across multiple secure custody partners to ensure robust operational resilience and institutional-grade asset protection. The Reserve Fund is custodied with leading providers such as Copper, Ceffu, and Fireblocks, while the Insurance Fund is secured through Ledger, reinforcing Delta Money’s commitment to secure and transparent asset management.
To manage the inherent volatility risk associated with crypto assets, Delta Money employs a disciplined hedging strategy that mitigates long exposure by shorting perpetual futures contracts. These hedges are executed across a diversified mix of centralized and decentralized trading venues, including Binance, Bybit, OKX, Deribit, Hyperliquid, Apex, and dYdX. This dynamic risk management framework enables Delta Money to maintain stability within its digital asset portfolio while ensuring DUSD remains resilient in the face of market fluctuations.
Delta Money employs a dynamic and market-responsive delta hedging strategy to manage its exposure to core digital assets, including Ethereum (ETH), Bitcoin (BTC), Binance Coin (BNB), and Solana (SOL). This framework is designed to promote price stability for DUSD while optimizing capital efficiency and revenue generation across the protocol.
The hedging approach is adjusted based on prevailing market incentives and risk-reward dynamics:
In structurally favorable market conditions, where the opportunity cost of shorting outweighs the benefit of hedging, Delta Money may strategically maintain a net-long position. This occurs when spot holdings exceed short positions in perpetual contracts. Such positioning reflects a medium-to-long-term conviction in the appreciation potential of underlying assets. For example, during periods of strong network growth or macro tailwinds in crypto markets, the protocol may elect to retain partial upside exposure to ETH or BTC while still protecting against sharp drawdowns.
In neutral or adverse market conditions, where there is minimal incentive to hold assets in spot, Delta Money shifts towards a fully delta-neutral posture. This involves balancing long spot positions with equivalent short positions via perpetual futures across platforms such as Binance, Deribit, OKX, dYdX, and others. In this configuration, the protocol focuses on capturing positive funding rates from short perpetual positions while eliminating directional price risk. For instance, during periods of sideways consolidation or negative sentiment, the strategy prioritizes stability over potential asset appreciation.
All delta exposure is continuously monitored and recalibrated to ensure that any potential trading losses are fully absorbed by the Insurance Fund, thereby ensuring that DUSD holders are never exposed to market risk. Conversely, any gains from net-long positions — whether through asset appreciation or favorable funding — are systematically allocated to the Insurance Fund, enhancing the protocol’s capital reserves and reinforcing systemic resilience.
This adaptive approach allows Delta Money to balance risk mitigation, capital growth, and ecosystem sustainability, aligning with institutional risk management standards while maintaining agility in a rapidly evolving digital asset landscape.
Delta Money’s Adaptive Delta Hedging framework is designed to provide institutional-grade risk mitigation for its exposure to volatile blockchain-native assets such as ETH, BTC, BNB, and SOL. The strategy dynamically manages delta risk by adjusting long and short positions based on prevailing market conditions, funding rates, and realized volatility metrics.
The protocol targets a neutral to modestly directional delta posture within a ±10% band under normal conditions, with a strict maximum exposure cap of ±20% to avoid overextension. Insurance Fund coverage is calibrated against net unhedged exposure, with a minimum buffer of 120% maintained at all times to absorb potential drawdowns without affecting the stability of DUSD.
In periods when funding turns negative, the strategy converts volatile assets into yield-bearing stablecoins to capture US Treasury yields and avoid losses, thereby providing an additional layer of protection. Risk exposure is actively managed across a diversified set of centralized and decentralized venues, with execution controlled through slippage-constrained algorithms and monitored in real time by a dedicated Risk & Treasury Committee.
While the gross spot exposure may exceed the size of the Insurance Fund, the directional exposure is rigorously controlled within predefined delta thresholds, ensuring that any potential losses, even under adverse market conditions, remain well within the Fund’s capacity to absorb, thereby maintaining the overall financial stability and resilience of the system.
