The Galleon core crew wishes to launch an Optimism based product suite, starting with ETH. These “Basis Yield” products will be delta neutral.
Galleon’s “Basis Trading Suite” is an Optimism-based product suite that provides high yield, delta-neutral exposure to the market through funding rate arbitrage by holding 66% Optimism ETH spot, the remaining 33% USD is used as collateral for the other -66% vETH PERP short position while auto compounding yields. The first product to be released will be our “BASIS Yield ETH Index (BYE) which hedges ETH utilizing perpetual protocol (PERP) and earns a variable USDC return (when the funding rate is +ve).
Given the chaos within the market, we cannot think of a better time to launch a basis yield strategy which helps to preserve and grow capital in volatile market conditions. BYE provides the most competitive yield in DeFi seen today whilst remaining derisked from the market, backed by historical backtesting that shows over time the yields remain consistent. As per R72.FI the past year funding rates have been consistently +ve accruing a potential 40.9% yield.
BYE charges no streaming, mint, or redemption fee and only operates a 20% performance fee when the product is earning the holder revenue. This performance fee is accrued during the rebalancing and re-investing of the set. If the funding rates were to become -ve (negative) the set will not accrue any performance fee.
Perpetual protocol’s funding rate period is every block, we will utilize the yield to maintain a leverage ratio between -1.9x and -3.0x.
- Composition: 66% spot ETH, 33% USD as collateral and -66% vETH perp short.
- Target Leverage Ratio: -2.0x
- Min Leverage Ratio: -1.9x
- Max Leverage Ratio: -3.0x
- Ripcord mechanism: -5.0x
- Rebalancing when the ratio drops below -1.9x or above -3.0x
- Reinvestment Interval: 3 days