Stablecoins
Stablecoin Backing Assets
Last updated
Stablecoin Backing Assets
Last updated
Delta Money's DUSD is underpinned by a strategically diversified portfolio of stablecoins, incorporating both fiat-backed and yield-bearing assets. The approved and whitelisted stablecoins include USDT, USDC, sUSDS, and USTB. This diversified backing enhances Delta Money's liquidity position, provides robust support for the peg stability of DUSD, and enables the generation of yield across both crypto-native and traditional fixed-income instruments. The prudent selection of stablecoins allows Delta Money to maintain a resilient and flexible asset structure, minimizing risk, while optimizing capital efficiency in response to evolving market conditions.
In market environments where funding rates are positive and exceed the yield generated from basis arbitrage, Delta Money allocates the majority of its capital into basis trading strategies. Specifically, this involves taking long spot positions in highly liquid and volatile crypto assets such as BTC, ETH, BNB, and SOL, while simultaneously shorting corresponding perpetual contracts on leading exchanges. This strategy allows Delta Money to capture positive funding rate differentials, thereby optimizing returns in favorable market conditions. Despite the higher allocation to the basis trade, Delta Money maintains a prudent approach to liquidity by ensuring that 20% of its reserve value is kept in liquid stablecoins and yield-bearing stablecoins. This reserve allocation is critical for meeting redemption requests without necessitating the closure of any positions, ensuring uninterrupted functionality even during periods of heightened market volatility.
In more challenging market conditions, such as when funding rates turn negative or fall below the yields from U.S. Treasury-linked assets, Delta Money transitions to a Risk-Off Mode. In this phase, the relative attractiveness of basis arbitrage diminishes, and as such, the protocol reallocates a significant portion of its reserves into liquid stablecoins and yield-bearing stablecoins. These assets, often tied to U.S. Treasury yields, provide stable and predictable returns, effectively mitigating exposure to the perpetual market and minimizing potential losses during periods of market stress. This reallocation enhances capital preservation, fortifies the peg stability of DUSD, and ensures the long-term security of the protocol. The dynamic flexibility of this allocation strategy enables Delta Money to navigate adverse market conditions with a focus on safeguarding the interests of its stakeholders, while ensuring that the protocol remains robust and operationally sound.
