| 1. CME Basis | Captures the premium between spot BTC and futures on regulated exchanges. | If spot BTC trades at $100,000 and the 3-month CME future trades at $106,000, a borrower buys BTC spot and sells the future. When the contract expires and prices converge, the $6,000 spread becomes locked-in profit (forming the yield paid to lenders). |
| 2. Delta-Neutral Funding | Arbitrage perpetual futures funding rates across exchanges. | If a borrower holds 1 BTC spot and shorts a perpetual future paying 0.02% funding every 8 hours, they collect steady BTC payments from long traders. Over a year, this can compound into ~10–15% annualized yield shared with lenders. |
| 3. Market-Making | Provides two-sided liquidity and earns spread income from trading volume. | If BTC trades between $99,950–$100,050, a borrower posts buy orders at $99,950 and sell orders at $100,050. Each completed trade earns a $100 spread. Repeated thousands of times per day, these small spreads compound into a predictable return. |