# FAQ
Source: https://docs.paystream.finance/faq

Frequently Asked Questions about Paystream

# Frequently Asked Questions

<AccordionGroup>
  <Accordion title="When did we win the Colosseum hackathon?">
    Paystream came 5th in the DeFi track of the 2025 Breakout Hackathon (Colosseum), one of the most competitive DeFi events of the year.

    <img alt="Colosseum Hackathon Result" />

    [Colosseum Hackathon Result](https://colosseum.org)
  </Accordion>

  <Accordion title="Who is in the team?">
    As of now, there are 6 people in the Paystream team:

    * [@MaushishYadav](https://x.com/MaushishYadav)
    * [@alok8bb](https://x.com/alok8bb)
    * [@hrsh\_ok](https://x.com/hrsh_ok)
    * [@hemantwasthere](https://x.com/hemantwasthere)

    Additionally, 2 more engineers are currently in the process of being onboarded.
  </Accordion>

  <Accordion title="What's the tentative roadmap?">
    Delta-neutral funding strategies are live. We're launching in phases, with users being accepted in batches to ensure smooth scaling and rapid iteration based on community feedback.

    **Early Access Waitlist:**
    [Sign up here](https://Paystream.finance) to get access to new features and updates!
  </Accordion>

  <Accordion title="Is there a demo of the product?">
    Yes! We were live on mainnet for some time before deciding to revamp the protocol architecture post-hackathon.

    **Watch the demo:**
    [YouTube Paystream Demo](https://www.youtube.com/watch?v=cckECNOPoc8)
  </Accordion>

  <Accordion title="What is the goal of Paystream?">
    Paystream's goal is to give users the best yields and equip traders with powerful tools to earn more. We do that through delta-neutral funding strategies that earn from perpetual funding rates without taking directional risk.
  </Accordion>

  <Accordion title="What are the raise details of Paystream?">
    Our ICO is live with MetaDAO! We're raising \$550,000 through a community-driven token launch with 10 million tokens at a fixed supply.

    **Key Details:**

    * Fixed supply of 10 million tokens for ICO participants
    * No FCFS or special tiers - fair access for all
    * 2.9M tokens allocated for liquidity
    * Team allocation of 11.85M tokens locked for 18 months with performance-based unlocking
    * Total supply at launch: 24.75 million tokens

    [More details](https://www.paystream.finance/blog/building-the-liquidity-optimizer-of-solana)
  </Accordion>

  <Accordion title="What is Paystream DAO LLC?">
    Paystream DAO LLC is a legal entity that owns all the intellectual property related to Paystream. It operates under a Futarchy governance model. The entity will be registered in the Marshall Islands and is currently in the process of incorporation.

    [More details](https://www.paystream.finance/Covenant.pdf)
  </Accordion>

  <Accordion title="Where can I join the community or ask more questions?">
    Join our Telegram for discussions, updates, and whitelist access:
    [t.me/Paystream](https://t.me/Paystream)

    **Website:** [https://Paystream.finance](https://Paystream.finance)

    **Twitter:** [@Paystreamlabs](https://x.com/Paystreamlabs)
  </Accordion>
</AccordionGroup>


# Funding Rate Guide
Source: https://docs.paystream.finance/funding-rate-guide

A complete guide to perpetual funding rates: how they work, how they're calculated, and how to use them for carry and delta-neutral strategies.

# What Is Funding Rate

Funding rate is a periodic payment between longs and shorts in perpetual futures.

**Payment is calculated as:**

Position Notional × Funding Rate

**Funding Rate ≈ Premium Component + Interest Component**

* If perp price > spot → funding is **positive** → longs pay shorts.
* If perp price \< spot → funding is **negative** → shorts pay longs.

It is not fixed. It updates every interval (commonly 1h or 8h depending on venue). The rate is derived from:

1. **Premium index** (perp price vs spot index deviation)
2. **Interest rate component** (usually small, often constant)
3. **Clamp limits** and exchange-specific formula

When traders aggressively long, perp trades above spot → funding increases positive. When traders aggressively short, funding turns negative.

Perpetual funding is paid at discrete timestamps. If your position is open at the exact funding snapshot time, you pay or receive the full funding amount for that interval, regardless of how long you held it during that interval.

The funding rate shown before a timestamp is usually calculated from the average premium over the previous period. For example, the payment at 08:00 is based on the prior 8h premium behaviour.

* Funding is a function of premium.
* Premium is a function of order flow imbalance.
* Order flow imbalance is a function of positioning behaviour.
* Positioning behaviour is visible through OI and price/OI delta.

**Funding is the price of leverage imbalance.**

***

# How Funding Is Calculated and Given

Funding is driven by the deviation between the perpetual contract and the spot index. Premium increases when perp price deviates from spot. The funding formula reacts to this premium.

Large aggressive volume moves perp price away from spot. That deviation increases premium. That premium increases funding.

Clamp mechanisms limit how extreme funding can go in a single interval. Different exchanges use different funding interval lengths (1h vs 8h), different premium calculation windows (TWAP vs instantaneous mark price), and different caps.

Funding rate shown before the timestamp is based on **prior premium behaviour**, not future expectations.

## Funding Rate Comparison Table

| Feature                | Drift                  | Hyperliquid             | Pacifica        | Lighter               |
| :--------------------- | :--------------------- | :---------------------- | :-------------- | :-------------------- |
| **Funding interval**   | 1 hour                 | 1 hour (1/8 of 8h rate) | 1 hour          | 1 hour                |
| **Sampling method**    | EMA on every trade     | Every 5 seconds         | Every 5 seconds | Every minute (random) |
| **Hourly cap**         | ±0.125% to ±0.4167%    | ±4%                     | ±4%             | ±0.5%                 |
| **Interest rate (8h)** | N/A (formula-based)    | 0.01% fixed             | 0.01% fixed     | Per-market parameter  |
| **Peer-to-peer?**      | Yes (with Rebate Pool) | Yes                     | Yes             | Yes                   |
| **Oracle**             | Pyth                   | Validator median        | Not specified   | Stork                 |

***

# Open Interest (OI) and What It Tells You

Open interest represents total outstanding contracts.

* **Rising OI + negative funding** = new shorts entering.
* **Falling OI + negative funding** = shorts closing.
* **Rising OI + funding moving toward zero** = new longs entering.

**OI delta vs price delta:**

| Price | OI   | Interpretation     |
| :---- | :--- | :----------------- |
| Up    | Up   | New longs dominant |
| Up    | Down | Short squeeze      |
| Down  | Up   | New shorts         |
| Down  | Down | Long liquidation   |

High OI percentile combined with extreme funding suggests a crowded trade. Low volume with high OI implies fragile positioning. Small moves can force liquidations and spike funding volatility.

* Rising OI with rising price indicates new leveraged longs entering.
* Rising OI with falling price indicates new shorts entering.

If OI is high and skewed to one side, the order book imbalance pushes perp price away from spot, increasing premium and therefore increasing funding.

**OI is commitment.**

***

# Volume and Why It Matters

Volume affects funding **indirectly** through price impact. Funding reacts to premium. Premium changes when trades move perp price.

* If a single large participant **buys aggressively**: perp price rises above spot → premium increases → funding increases.
* If they use **passive limit orders**: minimal price impact → funding barely moves.

**Funding responds to aggressive imbalance, not raw volume alone.**

Volume matters in two ways:

1. **Liquidity depth**: Thin book → small trades move price → funding volatile.
2. **Turnover relative to OI**: High volume with flat OI = position rotation, not imbalance expansion. High volume + rising OI = new exposure entering.

**Volume is intensity.**

***

# Market Conditions: Long Squeeze, Short Squeeze, and Crowding

**Short squeeze condition:** Price rising + OI high + funding negative → shorts trapped → forced buying.

**Long squeeze condition:** Price falling + OI high + funding positive → longs trapped → forced selling.

| Condition                              | Meaning                                                                             | Risk                                 |
| :------------------------------------- | :---------------------------------------------------------------------------------- | :----------------------------------- |
| **High positive funding + rising OI**  | New longs entering aggressively. Crowded long trade. Funding elevated but unstable. | Risk of long squeeze.                |
| **High positive funding + falling OI** | Longs closing.                                                                      | Funding likely to compress soon.     |
| **Negative funding + rising OI**       | New shorts entering. Short crowd building.                                          | If too crowded → short squeeze risk. |
| **Negative funding + falling OI**      | Shorts exiting. Discount resolving.                                                 | Opportunity fading.                  |

* High turnover relative to OI implies unstable funding.
* Low volume with high OI implies crowded, fragile positioning.
* Funding spikes compress quickly. Sustained 20–40% annualized is more realistic than 200%.
* High negative funding attracts longs and removes negative funding. High positive funding attracts shorts and removes positive funding.
* **Funding persistence duration** determines real profitability.

***

# Expected Net Carry

**Net yield = funding − borrow APR − trading fees − execution cost.**

Let: **F** = annualized funding, **L** = leverage, **C** = capital

**Gross return ≈ F × L**

High leverage amplifies yield but shrinks liquidation distance. High leverage can destroy EV even with high funding.

What determines how much you can earn:

1. Funding persistence
2. Net spread after borrow + fees
3. Leverage used
4. Survival probability
5. Capital allocation efficiency

Capital efficiency matters. If you must post full spot capital and separate perp margin, real leverage may be lower than assumed.

***

# How to Make Sure Leverage Is Correct

Liquidation distance shrinks as leverage increases.

* Maintain leverage such that **liquidation distance is comfortably above recent volatility**.
* Maintain **>2× liquidation buffer** of recent 30-day volatility.

For **delta-neutral:**

**Delta = Spot Notional − Perp Notional**

Rebalance if |Delta| exceeds your tolerance band.

Even delta-neutral strategies can face operational liquidation if leverage on one leg is miscalculated. Liquidation cascades can compress funding rapidly and destabilize the structure of your hedge. Leverage amplifies convex downside.

***

# Fees and How They Matter

Fees affect your **net carry**, not the funding rate itself. Entry and exit fees follow the maker/taker model.

* **Maker**: Fee if your order adds liquidity (limit order resting on book).
* **Taker**: Fee if your order removes liquidity (market order fills instantly).

Frequent re-hedging destroys yield. Fee tier drop risk exists: reduced activity may push you into a higher fee tier next month.

**Net APY = Annualized Funding − Trading Fees − Slippage − Borrow Costs.**

Funding might be 0.01% per interval. Round-trip slippage could be 0.05%. Small edge disappears quickly under fee drag.

## Fee Comparison Table

| Feature             | Drift             | Hyperliquid       | Pacifica    | Lighter            |
| :------------------ | :---------------- | :---------------- | :---------- | :----------------- |
| **Base taker fee**  | 0.035%            | 0.045%            | 0.040%      | **0% (Standard)**  |
| **Base maker fee**  | −0.0025% (rebate) | 0.015%            | 0.015%      | **0% (Standard)**  |
| **Best taker fee**  | 0.012%            | 0.024%            | 0.028%      | 0.0196% (Premium)  |
| **Best maker fee**  | −0.0035%          | −0.003%           | 0.000%      | 0.0028% (Premium)  |
| **Volume window**   | 30-day            | 14-day (weighted) | 14-day      | N/A (account type) |
| **Token discount**  | Up to 40% (DRIFT) | Up to 40% (HYPE)  | None listed | Up to 30% (LIT)    |
| **Liquidation fee** | -                 | -                 | -           | Up to 1%           |

***

# Slippage

Slippage is the implicit cost due to order book depth.

**Slippage % ≈ (Execution Price − Mid Price) / Mid Price**

If trade size exceeds liquidity near mid-price, execution price worsens. Slippage scales with trade size relative to order book depth and volatility.

In **delta-neutral:** You buy spot and short perp. If spot fills at one price and perp fills worse, you create immediate basis distortion. Your hedge is imperfect from entry. Liquidity shock increases slippage and raises rebalancing costs.

***

# ADL and Partial Liquidation

Auto-deleveraging (ADL) and partial liquidation remove leveraged positions mechanically. Funding exists because the perpetual price trades at a premium or discount to spot, typically driven by crowded leverage and high OI skew.

When price moves sharply against the crowded side, margin breaches trigger **partial liquidation**.

* **If longs are liquidated:** Forced selling pushes perp downward. Premium compresses. Basis narrows. Funding drops rapidly, often flipping sign.
* If losses exceed insurance coverage, **ADL** forcibly reduces profitable opposing traders. This shrinks OI further and accelerates premium collapse. The funding regime disappears because imbalance is forcibly reset.

**For a delta-neutral trader (long spot, short perp collecting positive funding):**

* High positive funding reflects crowded longs. If price falls, long liquidations push perp below spot. Funding compresses or turns negative.
* If ADL triggers, part of your profitable short perp can be force-closed. Your spot remains intact. You become **unintentionally net long**. Funding income stops. Directional exposure appears. The position changes from carry extraction to directional risk plus rebalance cost.

**Structural response:** Maintain lower leverage on perp leg. Monitor OI percentile and funding velocity. Avoid entering at extreme crowding. Automate delta rebalancing.

ADL changes funding because imbalance is mechanically removed. Your position changes because hedge symmetry breaks.

***

# Risk Scenarios to Model

| Scenario              | What happens                                                  |
| :-------------------- | :------------------------------------------------------------ |
| **Funding collapse**  | Funding turns negative after entry. Net APY becomes negative. |
| **OI unwind**         | OI drops sharply. Funding normalizes. Carry disappears.       |
| **Liquidity shock**   | Slippage widens. Hedge costs rise.                            |
| **Basis compression** | Perp converges to spot. Premium disappears.                   |

**Stress simulation:** Model funding goes to zero. Model funding flips negative. Model OI drops 30%. Model slippage doubles. **If Net APY under stress \< 0, do not enter.**

**Max Drawdown (MDD):** Largest % drop from highest equity point to lowest subsequent point before new high. Track cumulative PnL. If drawdown exceeds your threshold, reduce or close position.

***

# Practical Filters for Better Entry

| Filter                     | Rule                                                                                                  |
| :------------------------- | :---------------------------------------------------------------------------------------------------- |
| **Funding threshold**      | Enter only if funding percentile > 80th percentile and persistence above threshold.                   |
| **OI crowding**            | Avoid >95th percentile OI.                                                                            |
| **Volume-to-OI stability** | Require turnover/OI within stable band.                                                               |
| **Basis Z-score**          | Enter only when basis Z-score > statistical threshold (e.g. +2).                                      |
| **Funding flip detector**  | Velocity = Current Funding − Previous Funding. If sign-change probability increases, reduce exposure. |

***

# Resource

When we talk about funding rates elsewhere in the docs, this guide is the place to go deeper. If you want to know more, read this research by us: use the guide above or [download the PDF](/funding_rate_guide.pdf).


# How Paystream works?
Source: https://docs.paystream.finance/how-paystream-works

How Paystream works: delta-neutral strategies and safety.

Paystream focuses on **delta-neutral funding rate strategies** that let you earn from perpetual funding rates without betting on price. Here's how it works at a high level.

## Strategies

We run **delta-neutral funding strategies** so you can earn from perpetual funding rates without betting on price. You're not going long or short directionally; you're hedged so that price moves cancel out across your legs and you keep the funding spread.

We support two structures: **perp-to-perp** (two perpetual legs on different venues, earning the funding rate *difference*) and **spot-to-perp** (long spot and short perp to collect funding). We use Hyperliquid, Drift, Pacifica, and Lighter. Before we enter any trade we run pre-entry safety gates and a stress simulation; once in a position we use margin tiers, ADL handling, and a kill switch so one bad move doesn't blow up the book. For the full picture, see [Strategies](/strategies/overview).

**Vaults** give you the same yield without the manual work. You deposit USDC and receive **share tokens** that track your stake. The protocol deploys your capital into delta-neutral positions and rebalances automatically as funding rates shift across venues — opening, closing, and moving legs to chase the best yield. Your share price rises as the vault earns; when you withdraw, you burn shares and get back USDC plus your accrued yield. No positions to manage, no execution to worry about. See [Vault](/strategies/vault) for deposits, withdrawals, and risks.


# What is Paystream?
Source: https://docs.paystream.finance/introduction



**Maximize yield on every dollar.** That's what we're built for. Your capital should always be earning, whether that's funding rate arbitrage or delta-neutral yield. Paystream gives you one place to do it all on Solana.

## One Place, Every Yield Source

DeFi today is fragmented. Different protocols, different rates, different venues. Paystream brings it together. We run **delta-neutral funding strategies** so you can earn from perpetual funding rates without betting on price. Farm funding rate gaps across perp DEXs, each with different settlement intervals. Market-neutral. Automated. Or skip the manual work and deposit into our [vault](/strategies/vault) and let the protocol handle opening, closing, and rebalancing. See [Strategies](/strategies/overview) for the full picture.

## The Edge No Single Protocol Has

**Funding rate arbitrage, automated.** Earn the spread between venues without taking directional risk. We handle the hedging, execution, and rebalancing.

**Every dollar is deployed.** Margin earns while your position is open. Collateral earns while your trade runs. Nothing sits idle.

**Built on fragmented markets.** Different rates, different intervals, across every venue. The spread is structural. So is the return.

***

Visit [Paystream.finance](https://Paystream.finance) to get started. To understand the problems we're solving, see [Problem in existing solutions](/problem-current). To see how it all works under the hood, see [How Paystream works](/how-paystream-works).


# Paystream DAO
Source: https://docs.paystream.finance/paystream-dao

Governance, tokenomics, and ownership structure of the Paystream protocol

## Governance & Ownership Overview

Paystream is governed by **Futarchy**, a model that utilizes prediction markets to authorize decisions based on their projected impact on the PAYS token value. Instead of traditional popularity-based voting, proposals are executed only if the market predicts a positive price outcome.

The protocol is legally registered as a **Marshall Islands DAO LLC**. This structure guarantees that all intellectual property, revenue streams, and treasury assets are owned directly by the company and effectively, the PAYS token holders rather than the founding team.

***

## Token Launch & Supply

The PAYS token launched via a fair auction mechanism on [MetaDAO](https://metadao.fi) to align distribution with long-term value creation.

### Launch Mechanics

* **Hard Cap:** \$750,000
* **Initial Price:** $0.075 (Initial FDV: $1,856,250)
* **Oversubscription:** The launch received over \$6.1M in commitments. Due to the cap, participants were refunded approximately **87.8%** of their committed USDC.
* **Liquidity:** **20%** of raised funds were permanently allocated to protocol liquidity.

### Supply & Team Covenant

* **Total Supply at Launch:** 24.75 million tokens, allocated as follows:
  * **10 million** for the ICO at a fixed price for all participants
  * **2.9 million** for liquidity, including 2 million paired with 20% of funds raised and 900,000 as single-sided liquidity on Meteora
  * **11.85 million** for the team and early contributors, locked for 18 months and unlocked based on performance milestones
* **Team Lock-up:** The team allocation is bound by a strict performance-based covenant:
  * **18-Month Cliff:** Tokens are fully locked for 1.5 years.
  * **Performance Tranches:** This package is split into 5 equal tranches: one that unlocks at 2x ICO price, one that unlocks at 4x ICO price, and so on for 8x, 16x, and 32x. Each tranche contains 2,370,000 tokens and unlocks when the PAYS price reaches:
    * **\$0.15** (2x ICO price) - 2,370,000 tokens
    * **\$0.30** (4x ICO price) - 2,370,000 tokens
    * **\$0.60** (8x ICO price) - 2,370,000 tokens
    * **\$1.20** (16x ICO price) - 2,370,000 tokens
    * **\$2.40** (32x ICO price) - 2,370,000 tokens

### Protocol Addresses

| Account Type                    | Address                                        | Description                           |
| :------------------------------ | :--------------------------------------------- | :------------------------------------ |
| **PAYS Token Mint**             | `PAYZP1W3UmdEsNLJwmH61TNqACYJTvhXy8SCN4Tmeta`  | Native governance token contract.     |
| **USDC Mint**                   | `EPjFWdd5AufqSSqeM2qN1xzybapC8G4wEGGkZwyTDt1v` | Standard USDC for treasury/trading.   |
| **DAO Treasury (Squads Vault)** | `BpXtB2ASf2Tft97ewTd8PayXCqFQ6Wqod33qrwwfK9Vz` | "Squads Vault" receiving all revenue. |
| **Treasury USDC Account**       | `Fh6vP8zYdheJk9BdTTkSv879pBQFPZD25JctuYC83Nyt` | USDC treasury account.                |
| **DAO Multisig**                | `DtziL5LhzPd4nNiZLsvqC3skCjmHo2Zg37KzshvXYgSN` | Vault controller managed by Futarchy. |
| **DAO Creator**                 | `AdMZBEk6gT5CxSzcUe2s6G3vAybe8rpfy8NjPbDrH3BV` | Initial creator account.              |
| **AMM Base Vault**              | `7BmyPoTkgVPmjdFFcjhmxTrXLVieNvUspyrNwukMabw4` | Holds PAYS trading inventory.         |
| **AMM Quote Vault**             | `AncBeQe6QsTR29CsrVBEGxKfokra7TWh9MkqZ3UR7CEG` | Holds USDC trading liquidity.         |

***

## How Futarchy Works

Paystream removes political friction by replacing voting with financial incentives. [Learn more about Futarchy](https://docs.metadao.fi/governance/overview).

### Decision Mechanism

Every proposal creates two prediction markets:

1. **Pass Market:** The price of PAYS if the proposal passes.
2. **Fail Market:** The price of PAYS if the proposal fails.

If the "Pass" market trades higher than the "Fail" market, the proposal is automatically executed on-chain.

### Governance Parameters

* **Pass Threshold:** **150 bps (1.5%)**. The "Pass" price must exceed the "Fail" price by 1.5%.
* **Review Period:** **3 Days** (259,200 seconds).
* **TWAP Delay:** **1 Day**. Price calculations begin 24 hours after creation to prevent manipulation.
* **Proposer Stake:** **500,000 PAYS**. Required to submit a proposal.
* **Operational Spending:** The DAO has a pre-authorized limit of **33,500 USDC per month** for recurring operational costs.

### Legal & Asset Enforcement

* **Entity Status:** The DAO is a recognized legal entity, allowing it to enter contracts and limiting member liability.
* **IP Ownership:** Every IP is owned by the DAO LLC, controlled by the DAO. The **[Founding Covenant](/Paystream%20DAO%20LLC%20-%20Operating%20Agreement%20%28Certified%29.pdf)** (DAO LLC operating agreement, certified copy) legally binds the founder to transfer all assets (domains, GitHub, Socials) to the DAO LLC within 60 days of launch.
* **Treasury Control:** All revenue flows to the Treasury (`BpXtB2ASf2Tft97ewTd8PayXCqFQ6Wqod33qrwwfK9Vz`). If the covenant is breached, the DAO can restrict the team's access to funds.


# Problem in existing solutions
Source: https://docs.paystream.finance/problem-current

What makes Paystream different.

Let's talk about the problems we're solving. We've all been there - dealing with platforms that don't quite work the way we need them to.

## Billions Idle, Yield Uncaptured

The biggest problem in DeFi today isn't that yield doesn't exist. It's that so much of it never gets captured. Capital sits idle. Spreads go uncaptured. The tools to route between protocols and harvest the best returns either don't exist or live in silos. Three numbers tell the story:

**\$9.2B**: Solana DeFi TVL is fragmented across protocols with no single tool routing between them to find the best yield. Your capital lands in one place and stays there, even when better opportunities exist elsewhere.

**\$10B+**: DEX perp open interest runs across multiple venues. Each one has a different funding rate and a different settlement clock. The spread between them is structural. Almost nobody is capturing it.

**80%**: Of available yield is left on the table by users who lack cross-protocol tooling. They can't compare venues, can't arbitrage funding gaps, and can't deploy into the best pools without juggling a dozen apps.

Below we break down the specific pain points (liquidity provisioning, strategy execution, and more) and how Paystream fixes them.

***

## Liquidity Provisioning Layer

### The Fragmentation Problem

**The Problem:** Want to provide liquidity? You'll need:

* One app to create positions
* Another app to see analytics
* A third tool to track performance
* Multiple tabs open just to manage one position

It's exhausting. You spend more time switching between apps than actually managing your positions.

**Our Solution:** Everything in one place. Create positions, see analytics, track performance, discover pools - it's all here. One platform, zero tab-switching.

### The Manual Work Problem

**The Problem:** Managing liquidity positions is like having a second job. You need to:

* Constantly check your positions
* Manually rebalance when prices move
* Set take profit and stop loss levels
* Monitor everything across different protocols

One mistake and you could lose money. The stress is real.

**Our Solution:** Automation that works while you sleep. Save your strategies as presets and reuse them with one click. Auto-rebalancing keeps your positions optimized. Set your TP/SL and walk away. We handle the busy work.

### The Analytics Problem

**The Problem:** Want to know if a pool is worth your time? You'll need to:

* Visit multiple websites
* Calculate scores manually
* Compare data from different sources
* Hope you're making the right decision

By the time you figure it out, the opportunity might be gone.

**Our Solution:** All the metrics you need, right here. Market Cap Liquidity, Lincoln Score, Volatility, Exit Score - we calculate everything and show it to you. No more research, just decisions.

### The Scattered Portfolio Problem

**The Problem:** Your positions are everywhere. Some on Meteora, some on Raydium. To see everything you own, you need to:

* Log into multiple platforms
* Remember which positions are where
* Manually track your total PnL
* Hope you didn't forget about any positions

It's like having money in 10 different bank accounts with no way to see your total balance.

**Our Solution:** One portfolio view for everything. All your positions across all protocols, all in one place. See your total performance, track your history, manage everything from one dashboard. Simple.

***

## Strategies

### The Funding-Without-Direction Problem

**The Problem:** Earning from perpetual funding rates sounds great until you realize most setups leave you exposed. You want to harvest funding without betting on price, but doing it safely means juggling two legs, margin, ADL risk, and execution across venues. One bad fill or one venue’s auto-deleveraging can blow up the hedge.

**Our Solution:** We run delta-neutral funding strategies (perp-to-perp and spot-to-perp) on Hyperliquid, Drift, Pacifica, and Lighter. Pre-entry gates and stress checks decide whether we enter; margin tiers and a kill switch decide when we reduce or exit. You get exposure to funding yield with risk controls built in. See [Strategies](/strategies/overview) for the full picture.

### The Manual Execution Problem

**The Problem:** Even when you understand funding strategies, running them yourself means constant work. You need to open positions, monitor funding rates across venues, rebalance when the edge shifts, and close legs at the right time. Miss a rebalance or hold too long in negative funding and you lose. It's like a second job.

**Our Solution:** Put your USDC in the vault and let go. The protocol opens, closes, and rebalances automatically, chasing the highest funding yield so you don't have to. You deposit, earn, and withdraw when you want. No positions to manage, no spreadsheets, no late-night rebalancing. See [Vault](/strategies/vault) for how it works.

***


# Auto-Close
Source: https://docs.paystream.finance/strategies/auto-close

When and why we close positions: pipeline, cascade detection, liquidation proximity, delta/ADL, funding inversion, and close execution.

## What Is Auto-Close?

Auto-close is the layer that decides when to exit. In delta-neutral strategies you're hedged and in theory you're safe. But things break. When danger crosses a threshold, we close both legs. No debate. We live to trade another day. The alternative is liquidation. We treat that as unacceptable.

We watch every open position continuously. When something looks wrong, we don't wait for you to notice. We run through a checklist in order of priority, and the first item that says "close" wins. Below we explain each trigger, why it exists, and how we make sure the close actually goes through.

***

## How Auto-Close Works

Every open position is monitored continuously. Each cycle runs a priority-ordered check pipeline. The first check that triggers a close wins.

Pipeline order (highest priority first):

1. **Cascade velocity detection** "Will I be liquidated in the next few minutes?"
2. **Liquidation proximity** "Am I too close to my liquidation price?"
3. **Delta drift / ADL detection** "Did my position size change unexpectedly?"
4. **Funding rate inversion** "Has funding been working against me for hours?"

If none trigger, the position stays open and the cycle repeats.

***

## The Problems That Trigger a Close (and How We Respond)

### Cascade Velocity: Liquidation Coming Too Fast for Level Checks

**The problem.** Checking how close you are to liquidation every few seconds sounds good, until you realize liquidation can happen in 60 seconds. During the October 2025 crash, \$3.21 billion was liquidated in a single 60-second window. By the time the next check runs, you could be gone.

**How we respond.** We don't just ask "how close am I?" We ask "at the speed price is moving right now, how many minutes until I hit liquidation?" If the answer is "not long," we close. A sharp wick doesn't trigger this. It takes a sustained move in the wrong direction.

### Liquidation Proximity: The Static Safety Net

**The problem.** Even without a fast crash, price can slowly drift toward your liquidation level. You need something watching that regardless of speed.

**How we respond.** We check the distance between your current price and your liquidation price on both sides of the position. If either side gets too close, we close both immediately.

### Delta Drift / ADL: The Exchange Force-Closes Your Profitable Leg

**The problem.** Exchanges don't know you're hedged. Auto-deleveraging (ADL) can close your winning leg and leave the other one sitting there, fully exposed. That's the worst thing that can happen in a delta-neutral strategy.

**How we respond.** We watch both sides of your position. If one leg disappears, we close the other immediately. If one leg shrinks or the two legs drift apart from each other, we close both. We never act on incomplete information. If we can't read a leg, we wait for the next cycle.

### Funding Rate Inversion: The Edge Flips Against You

**The problem.** You entered because funding was positive. Now it's negative and you're paying instead of collecting. The whole reason the trade existed is gone.

**How we respond.** We track funding rates across all supported venues. If net funding has been negative for several consecutive hours, we close. One bad hour is normal. Several in a row means the trade is no longer working in your favor.

### Collateral Depeg: Your Margin Is Worth Less Than the System Thinks

**The problem.** Your margin sits in stablecoins. If those stablecoins lose their peg, your margin is worth less than the system assumes and your liquidation price is closer than it looks. USDC dropped 13% during the SVB collapse. USDe hit \$0.65 in October 2025.

**How we respond.** We monitor your collateral every cycle. If it depegs meaningfully, we close all positions on affected venues immediately.

### Take Profit: Target Hit

**The problem.** There isn't one. You've hit your target and want to lock it in.

**How we respond.** When the target is hit, we close both legs.

### Close Execution and Retry: Making Sure the Close Goes Through

**The problem.** We trigger a close. The order doesn't confirm. We can't just assume it worked.

**How we respond.** We send the close request and then watch to make sure it actually filled. If it's taking too long, we retry. Each retry is a bit more aggressive to make sure it goes through. We check what actually filled, not just what was sent. If one leg closed but the other didn't, we catch it. When both legs are on the same chain, we send them together so they either both close or neither does.

***

## What We're Building

The following protections are designed, backtested against 7 historical black swan events, and scheduled for implementation.

**Four-tier margin defense.** Instead of waiting until you're near liquidation, we respond in stages: normal monitoring when things are healthy, blocking new entries and tightening take-profit when margin dips, reducing the position when it dips further, and closing everything in an emergency.

**Venue outage detection.** If one exchange goes unreachable, we block new entries and alert you. If it stays down, we hedge on a third venue or reduce the open leg to limit exposure. Lighter was down 4.5 hours during October 2025. dYdX was offline for 8.

**Cross-venue price divergence.** If the two exchanges start pricing the asset differently during stress, your hedge breaks down. We compare prices continuously and reduce or close if they drift too far apart.

**Kill switch.** A separate process that can stop all trading immediately, even if the trading engine itself is hanging. Can kill per-strategy, per-venue, or globally. Auto-triggers if drawdown, margin, or delta cross safe thresholds.

**Entry rollback.** If one leg opens and the other fails, we close the first leg right away. No one ends up with an unhedged position.

**Volatility circuit breaker.** We block new entries when price has been moving too fast. Entering during peak chaos is when slippage and liquidation risk are highest.

**Pre-entry safety gates.** A checklist that must fully pass before any trade opens. It covers funding quality, spread, crowding, volatility, margin buffer, insurance fund health, ADL risk, price feed freshness, and order book depth. If any item fails, we don't enter.

**Exchange-side stop losses.** Stop-loss orders placed directly on the exchange so they fire even if our entire system is offline.

For the full safety framework and stress testing against 7 historical black swan events, see [Safety Mechanisms](/strategies/safety-mechanisms). For how this fits with [Overview](/strategies/overview), [Perp to perp](/strategies/perp-to-perp), and [Spot to perp](/strategies/spot-to-perp), use those links.


# Overview
Source: https://docs.paystream.finance/strategies/overview

Delta-neutral funding strategies: what they are, what we aim to achieve, and the safety and liquidation measures we use.

Ever wondered how some traders earn from perpetual markets without betting on price? That’s what delta-neutral funding strategies are about. You’re not guessing up or down, you’re capturing the **funding rate** that exchanges use to keep perp prices in line with spot. When the perp trades above spot, longs pay shorts; when it trades below, shorts pay longs. Think of funding as the *price of that imbalance*. Our strategies aim to harvest that flow while staying hedged so that price moves cancel out across your legs.

## What We're Trying to Achieve

The idea is simple: **enter and exit** the position for less than the funding income it generates. That comes down to a few things:

* **Staying hedged**: Both legs move with the market, so price risk nets out and you’re left with the funding spread.
* **Keeping execution tight**: We target low execution cost (e.g. sub-10 bps where possible) so fees and slippage don’t eat the edge. Net carry is funding minus borrow cost, fees, and execution; we care about that net number.
* **Respecting tail risk**: ADL can close one leg and leave you naked, oracles can misprice, and liquidity can dry up. So the safety layer, pre-entry gates, margin tiers, kill switch, and conservative leverage, is as important as the funding spread itself.

Think of it as: we only take the trade if the math works and the safety checks pass. Missing a trade is better than entering a bad one.

## Safety Measures We Have

We only open a position after **pre-entry gates** pass: funding must be worth it and profitable after costs, spread and OI must be within limits, and we run a **stress simulation** (e.g. price drop, funding flip, ADL hit, slippage spike). Once in a trade, we monitor margin, PnL, delta, and depth in real time and alert when we approach warning or danger tiers. Automatic exits, ADL handling, and the kill switch are all part of the same framework. You can read more in [Safety Mechanisms](/strategies/safety-mechanisms).

## Liquidation Measures We Have

The exchange doesn’t net your legs: each perp margin stands on its own, so we size and keep a **liquidation buffer** (e.g. 15% or 2× recent vol) and allow for **basis divergence** in spot–perp. We use a **four-tier margin defense**: we monitor when healthy, alert and tighten when warning, reduce size in danger, and **auto-close** everything at emergency. We also treat **ADL** as a top risk (it can close your hedged leg and leave the other naked), so we keep leverage low and react immediately if ADL fires. You can read more in [Safety Mechanisms](/strategies/safety-mechanisms) and [Auto-close](/strategies/auto-close).

## Strategy Types

**Use this when:** You want to pick the right structure for your funding play, two perps vs spot + perp.

We support two main approaches:

* **[Perp to perp](/strategies/perp-to-perp)**: Two perpetual legs on different venues; you earn the funding rate *difference*. No spot leg, so no portfolio margin offset; each leg is margined separately. Suited when the best edge is between two perp venues.

* **[Spot to perp](/strategies/spot-to-perp)**: Long spot and short perp to collect funding. Same-venue with portfolio margin gives the best capital efficiency (spot profit can offset perp margin); cross-venue gives more funding choice but adds transfer risk and no margin netting.

* **[Vault](/strategies/vault)**: Don’t want to manage positions yourself? Deposit USDC and let the protocol handle it. The vault runs the same delta-neutral strategies on your behalf: opening, closing, and rebalancing to chase the highest funding yield. You get share tokens that track your stake and withdraw whenever you want. Set it and forget it.

For safety mechanisms, see [Safety Mechanisms](/strategies/safety-mechanisms). For when and why we close, see [Auto-close](/strategies/auto-close).


# Perp to Perp
Source: https://docs.paystream.finance/strategies/perp-to-perp

Funding rate arbitrage using two perpetual legs on different venues to harvest the funding rate differential.

**Use this when:** The best funding edge is *between two perp venues*, you want to harvest the rate *difference*, not run a spot leg.

Perp-to-perp is when you run **two perpetual positions on different venues** and pocket the **difference** in their funding rates. You’re not betting on direction, you’re delta-neutral, so price movement on one leg cancels the other. Your edge is purely the funding spread between the two venues.

## What Is Perp-to-Perp?

You go **short** where funding is **higher** (you receive from longs) and **long** where it’s **lower** (you pay less). The net is what you keep.

Example: Hyperliquid pays +0.03% per 8h, Drift pays +0.01% per 8h. You short the higher-funding venue and long the lower. Your net is 0.02% per 8h, about 0.06% per day, or roughly 22% APR. The position is hedged: you’re harvesting the funding gap, not price move.

There’s **no spot leg**, so there’s no portfolio margin. Each perp leg has its own margin and liquidation price. Leg risk (one leg filled before the other) and ADL risk (one venue force-closing your profitable leg) both apply. We keep leverage at 2–3x and follow our [Safety Mechanisms](/strategies/safety-mechanisms) so you’re not caught off guard.

## What We Have Here

We use **Hyperliquid**, **Drift**, **Pacifica**, and **Lighter**. We pair venues depending on where the funding spread is best (e.g. Hyperliquid vs Drift for Solana-native pairs) and place orders using each venue’s native SDK so execution is under our control.

To keep cost down, we use **post-only** on both legs where we can, that keeps net execution cost at or below a few bps. We put the taker leg on the more liquid venue (to limit slippage) and the maker leg on the other.

## Execution and Risk

**Entry**: We hit the faster or more liquid venue first with a taker (IOC or market) so we get a known fill and size. Then we place a maker (post-only limit) on the other venue for that exact size. We don’t leave the second leg hanging: if it’s not filled within a few seconds, we market the rest so we’re not sitting with one leg open and exposed.

**Exit**: We close the **less reliable leg first** (e.g. the venue with slower finality or thinner book), then the other. We use IOC or market on both: speed over fee savings. In an emergency we cancel everything, market-close the first leg, then market-close the second without waiting for confirmations, and we retry the first leg up to 3× if needed.

**Risks**: No portfolio margin offset means each leg stands on its own. ADL on one venue can close your profitable leg and leave the other naked. That’s why we stick to leverage ≤ 3x, monitor ADL every 30s, and follow [Safety Mechanisms](/strategies/safety-mechanisms): reduce at ADL 4/5, exit at 5/5, and if ADL fires on one leg, we close the other at market immediately.

For the full safety framework, pre-entry gates, and auto-close options, see [Safety Mechanisms](/strategies/safety-mechanisms) and [Auto-close](/strategies/auto-close). For the big picture and how this fits with spot–perp, see [Overview](/strategies/overview).


# Safety Mechanisms
Source: https://docs.paystream.finance/strategies/safety-mechanisms

How we protect your capital: pre-entry gates, entry safety, margin tiers, venue outage handling, and monitoring.

## What Are Safety Mechanisms?

Safety mechanisms are the checks and protocols that sit between your capital and everything that can go wrong. Delta-neutral funding sounds simple: you're hedged, you collect funding. In practice, things break. We assume the worst and build layers that guard at every phase. We'd rather skip a trade or exit early than hope and hold.

We check every trade before it opens, make sure both legs fill before calling it open, watch margin continuously and act before the edge, handle exchange outages, and keep a kill switch separate from the trading engine so it can stop everything even if the engine hangs. The [auto-close pipeline](/strategies/auto-close) is live. Several other layers are designed and being rolled out. We've tested every guard against 7 historical crashes. For the exit side, see [Auto-close](/strategies/auto-close).

Below we spell out each risk we guard against and how we handle it.

***

## The Problems We Guard Against (and How)

### Bad Entry: Taking a Trade That Doesn't Pay

**The problem.** You open a position when funding looks good, but it flips negative an hour later. Or the spread is too tight and fees eat your edge. Or the trade is so crowded that ADL risk is sky-high. You're in before you know it's a bad idea.

**How we protect.** We run pre-entry gates before opening any position. If any gate fails, we skip. Missing a trade is better than entering a bad one.

| Gate                           | What It Checks                            | Pass Condition                                                                                   |
| :----------------------------- | :---------------------------------------- | :----------------------------------------------------------------------------------------------- |
| **Funding profitability**      | Is the funding diff worth it?             | Current diff above the recent historical range; funding positive for multiple intervals in a row |
| **Trade profitability**        | Does the spread allow profit after costs? | Net entry cost within acceptable range; break-even under 48h                                     |
| **Cross-market spread**        | Is spread wide enough for execution?      | Current spread above its recent average                                                          |
| **Open interest crowding**     | Is the trade too crowded?                 | OI not in the top percentile of its range                                                        |
| **Volatility circuit breaker** | Has price moved too much lately?          | Recent move within normal bounds                                                                 |
| **Basis Z-score**              | Is perp premium overstretched?            | Not too far above fair value                                                                     |
| **Liquidation buffer**         | Enough margin cushion after entry?        | Sufficient buffer relative to recent volatility                                                  |
| **Insurance fund**             | Is the exchange's safety net healthy?     | Insurance balance above its recent average                                                       |
| **ADL level**                  | How close are we to ADL risk?             | ADL indicator in the safe range                                                                  |
| **Oracle freshness**           | Is the price feed up to date?             | Within the freshness threshold for each venue                                                    |
| **Order book depth**           | Can we exit if we need to?                | Enough liquidity on both sides to absorb the position                                            |
| **Leverage**                   | Hard cap on leverage                      | Conservative limit, stricter for smaller assets                                                  |

Before every entry we also run a quick stress simulation. What if price drops sharply in an hour? What if funding flips negative for two days? What if ADL closes our profitable leg? If any scenario looks unacceptable, we don't enter.

### Half-Open Positions: One Leg Fills, the Other Fails

**The problem.** You're running two legs, long on one venue and short on another. Leg 1 fills. Leg 2 fails. You're now directional and exposed. One bad move and you're liquidated.

**How we protect.** For same-chain pairs, both legs go in a single atomic transaction. Both open or neither opens.

For cross-venue pairs, if the second leg fails we immediately close the first. If that rollback works, nothing is left open and we notify you. If it fails, we flag it for manual review and alert you immediately. You're never left half-open without explicit notification.

We also verify every fill. If what came back is short of what we requested, we retry the remainder or close the partial. If the two legs are mismatched after execution, we rebalance or close both.

### Margin Creep: Drifting Toward Liquidation Without Warning

**The problem.** Margin drops slowly, then suddenly. By the time you notice, you're one move from liquidation.

**How we protect.** We act in tiers so there's time to react before things get critical.

| Tier              | Margin Ratio | What We Do                                                                   |
| :---------------- | :----------- | :--------------------------------------------------------------------------- |
| **1 – Healthy**   | > 300%       | Monitor only; no action                                                      |
| **2 – Warning**   | 200–300%     | Alert; stop new entries; tighten take-profit                                 |
| **3 – Danger**    | 150–200%     | Reduce position; add collateral if needed; cancel all orders                 |
| **4 – Emergency** | under 150%   | Close everything. See [Auto-close](/strategies/auto-close) for how and when. |

### Venue Outage: One Exchange Goes Down While You're Exposed

**The problem.** One of your leg venues goes offline. You can't see your position, can't close it, can't hedge. Lighter was down 4.5 hours during the October 2025 crash. dYdX was offline for 8 hours.

**How we protect.** We watch both venues continuously. If one goes unreachable, we block new entries and alert you. If it stays down, we hedge on a third venue if we have the capital, or reduce the open leg to limit exposure. When the venue comes back, we re-verify your position before resuming normal monitoring and close any temporary hedge we placed.

### Engine Hang or Runaway: The Bot Stops Responding or Goes Rogue

**The problem.** The trading engine hangs, crashes, or starts behaving unexpectedly. You need something outside the main loop that can stop everything.

**How we protect.** The kill switch runs in a completely separate process. The engine checks the kill flag before every order; if it's set, everything stops. We can kill per-strategy, per-venue, or globally. If the engine stops responding on its own, it self-kills and alerts. Auto triggers include drawdown crossing a threshold, any API down for too long, margin too low, or delta too far from neutral.

### Optional: Extra Layers We're Building

Exchange-side stops place a stop-loss directly on the exchange, surviving even a full bot crash. Graduated confidence scores each pre-entry gate and scales position size by the result rather than a hard pass or fail. Graceful degradation steps down from full trading to exit-only to emergency close. On startup we run in read-only mode for a few minutes before allowing any new trades.

### How We Watch: Monitoring Infrastructure

All safety checks run continuously. Multiple positions are checked at the same time. For each position the priority order is: liquidation proximity first, then delta drift and ADL, then funding rate inversion. Funding data is collected from all supported venues regularly. Prices are pulled from multiple sources with automatic fallback.

### Validating Against History: Stress Testing

Every safeguard is tested against seven historical black swan events. Each simulation uses real historical prices, real funding rate shifts per venue, actual exchange downtime windows, and realistic slippage and execution delays. Every guard is confirmed to trigger before liquidation under each scenario.

**USDC depeg / SVB collapse (March 2023).** Collateral devalues 13%, funding rate volatility. Tests collateral health detection, funding flip guard.

**Curve/CRV exploit cascade (July 2023).** DeFi contagion, -30% crash, extreme negative funding. Tests cascade velocity detection, funding flip guard.

**Bitcoin ETF sell-the-news (January 2024).** BTC -14%, funding inversion, long liquidation cascades. Tests liquidation proximity, funding flip guard.

**Hyperliquid JELLY short squeeze (March 2025).** 429% pump, exchange force-settles positions. Tests position-gone detection, venue counterparty risk.

**October 2025 "The Big One."** $19.13B liquidated in 24 hours, BTC -14.5%, SOL -40%, venue outages, ADL activated across all major exchanges, $3.21B liquidated in a single 60-second window. Tests all safety mechanisms simultaneously.

**December 2024 flash crash.** BTC drops 7% rapidly, \$400M+ liquidations. Tests cascade velocity, liquidation proximity.

**POPCAT manipulation (2025).** Memecoin market manipulation, exchange bad debt. Tests position-gone detection, venue-specific risk.

For how these fit with [Overview](/strategies/overview), [Perp to perp](/strategies/perp-to-perp), and [Spot to perp](/strategies/spot-to-perp), use the links to jump between pages.


# Spot to Perp
Source: https://docs.paystream.finance/strategies/spot-to-perp

Classic funding rate arbitrage: long spot and short perp to collect funding, with same-venue and cross-venue options.

**Use this when:** You want the classic funding play, long spot, short perp, with the option to use same-venue portfolio margin or chase better rates cross-venue.

Spot-to-perp is the **classic** funding play: you’re **long spot** and **short perp**. When funding is positive, shorts get paid by longs, you collect that. Price move on spot is offset by the perp, so you’re delta-neutral and left with the funding income. Your hedge is **Spot Notional − Perp Notional**; we rebalance when that delta drifts beyond our tolerance so the position stays effectively neutral.

## What Is Spot-to-Perp?

You buy the asset on spot and sell it on perpetual. The exchange does **not** net your spot and perp for margin, the perp leg has its own liquidation price. So margin has to survive worst-case **basis divergence**: the gap between spot and perp can widen in stress (historically about 3–8% for BTC; more for small caps). We size for that and keep leverage low (2–3x) so we’re not riding the edge.

## Same-Venue vs Cross-Venue

**Same-venue** (where the venue supports portfolio margin so spot profit can offset perp margin) gives the best capital efficiency: you need **30–60% less** capital than running each leg separately. We use post-only on both legs where we can.

**Cross-venue** (e.g. spot on one venue, short perp on Hyperliquid, Drift, Pacifica, or Lighter) can give you better funding rate choice, but you lose the margin offset and take on transfer risk and extra ops. We use it when the funding spread justifies it.

## Liquidation and Basis Risk

The perp leg has its own liquidation price; the venue doesn’t see your spot hedge. We keep margin enough for worst-case basis divergence and keep a liquidation buffer of at least max(15%, 2× 30-day realized vol). Max safe leverage in practice is limited by basis risk plus maintenance margin plus that buffer, we stay at 2–3x. For the full margin tiers and when we auto-close, see [Auto-close](/strategies/auto-close).

For safety mechanisms and auto-close options, see [Safety Mechanisms](/strategies/safety-mechanisms) and [Auto-close](/strategies/auto-close). For how this fits with perp–perp and the overall framework, see [Overview](/strategies/overview).


# Vault
Source: https://docs.paystream.finance/strategies/vault

Deposit USDC, earn yield from delta-neutral funding. The vault handles everything, no manual positions, no rebalancing.

Don’t want to manage perp legs, margin, or rebalancing yourself? The vault is for you. You deposit USDC, we put it to work using our delta-neutral funding strategy, and your deposit grows over time. You withdraw whenever you want, your original amount plus the yield it earned. No perpetuals knowledge needed, no manual steps after depositing.

## How It Works (Simple Version)

1. You deposit USDC into the vault
2. You receive vault share tokens (proof of your ownership)
3. Your USDC is deployed into yield-generating positions
4. Yield flows back, your shares become worth more
5. You burn your shares anytime to get back USDC plus earned yield

The protocol handles opening, closing, and rebalancing. Your job is to deposit and withdraw when it suits you.

## What Are Share Tokens?

When you deposit, you get share tokens. They represent your slice of the vault, like buying into a fund. The share price starts at \$1.00 and rises as the vault earns yield.

**Example:**

* You deposit $1,000 when share price is $1.00 → you get 1,000 shares
* Vault earns yield → share price rises to \$1.10
* You withdraw all 1,000 shares → you receive \$1,100
* Your profit: \$100

If someone else deposits later when the share price is already \$1.10, they get fewer shares per dollar, but their shares grow at the same rate from there. Earlier depositors benefit from being in longer.

## How Yield Is Generated

The vault uses **delta-neutral funding strategies** to earn from perpetual funding rates. We run hedged positions so price moves cancel out across our legs; no directional exposure. When funding is positive, we collect; the vault turns those payments into yield.

We manage positions in a way that **reduces risk and maximises return**. We apply the same safety mechanisms as our manual strategies: pre-entry gates, stress simulations, margin tiers, and a kill switch. We size and monitor for liquidation and ADL risk so one bad move doesn’t blow up the book. At the same time, we rebalance and rotate across venues and pairs to chase the highest funding rates. See [Safety Mechanisms](/strategies/safety-mechanisms) for how we protect positions and handle liquidation.

## What Happens to Your Money

Your USDC goes into the vault. You hold share tokens that track your ownership. The vault deploys that USDC into delta-neutral positions. Funding payments flow in. Yield returns to the vault and the share price goes up. When you withdraw, you burn shares and get USDC plus your share of the yield.

## Fees

| Fee                 | What it is                                                                                                                   |
| ------------------- | ---------------------------------------------------------------------------------------------------------------------------- |
| **Management fee**  | A small annual percentage on your deposited value. Taken over time, not as a lump sum. Already reflected in the share price. |
| **Performance fee** | A percentage of the profit earned. Only charged on actual gains. If the vault doesn’t make money, you don’t pay this.        |

Both are baked into the share price. What you see is your net return. No hidden deductions.

## Risks You Should Know

| Risk                           | What it means                                                                                                               |
| ------------------------------ | --------------------------------------------------------------------------------------------------------------------------- |
| **Funding rate goes negative** | In bearish markets, the vault may earn less or briefly lose money. We pause or rotate to safer setups during these periods. |
| **Withdrawal delay**           | In request-based mode, you wait for the cooldown before accessing funds.                                                    |
| **Smart contract risk**        | As with any on-chain protocol, smart contracts carry risk. Audits reduce but don’t eliminate it.                            |
| **Operator risk**              | The vault operator manages positions off-chain and deploys funds into strategies. Trust in the operator is required.        |
| **Liquidity risk**             | If most USDC is deployed, instant withdrawals may not be available until funds are returned.                                |