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Borrowers in this Series execute the Delta-Neutral Funding strategy: a market-neutral approach that earns yield from the funding-rate differential between long and short perpetual futures across exchanges. A perpetual future is a type of futures contract with no expiry date. Traders pay or receive a small funding fee every few hours to keep the contract price aligned with Bitcoin’s real spot price. This strategy captures those periodic funding payments (not price movements) to generate a steady BTC-denominated yield from market imbalances.

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How the Strategy Works

The strategy captures periodic funding payments that flow between long and short traders on perpetual futures exchanges. These payments occur every few hours and are calculated as a percentage of the contract’s notional value. For those borrowing BTC on Nexio, this might look as follows:
  1. Borrow BTC & Buy BTC on Spot Market: The borrower borrows BTC on Nexio and holds it as their spot position, forming the base of the trade.
  2. Short Perpetual Futures: The borrower simultaneously opens a short position in a BTC perpetual futures contract on an exchange with favorable funding rates, meaning longs pay shorts.
  3. Hold the Hedge: As BTC’s price moves, gains and losses on the spot and futures positions cancel out. The trade remains delta-neutral, meaning immune to directional price swings.
  4. Collect Funding Payments: The borrower earns recurring funding payments from long traders on that exchange, which accumulate as BTC yield over time.

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Example: 0.03% funding rate

Assume BTC trades at $100,000, and a perpetual futures contract on Exchange A pays a +0.03% hourly funding rate to short positions. The borrower:
  • Buys 1 BTC on the spot market.
  • Sells 1 BTC perpetual futures on Exchange A.
If BTC’s price rises to $105,000, the spot position gains $5,000 while the short futures loses $5,000, resulting in no net directional profit or loss.
Meanwhile, the borrower continuously earns the 0.03% hourly funding from long traders on Exchange A. For lenders, the Delta-Neutral Funding Series provides predictable, BTC-denominated coupons backed by this funding-rate spread.
Borrowers are Tier 1 and Tier 2 trading firms with exchange access, proven hedging systems, and strict collateralization, ensuring BTC-backed coupons remain verifiable and transparent on-chain throughout the Series term.