Hyperithm Cross-Exchange Funding Arb

About

The Hyperithm Cross-Exchange Funding Arb vault employs multiple market-neutral strategies designed to generate yield independent of crypto market direction.

Capital is allocated dynamically across these strategies and select opportunistic trades, with strict risk controls to maintain minimal directional exposure and strong margin health.

Its primary strategy:

• Cross-exchange funding arbitrage

Earning carry from dislocations across multiple centralized and decentralized perpetual markets.

With Hyperithm Cross-Exchange Funding Arb, the objective is to deliver consistent, risk-adjusted returns by exploiting structural market inefficiencies across multiple strategies.

Cross-Exchange Funding Arbitrage

The Cross-Exchange Funding Arbitrage strategy captures yield from funding rate differentials across centralized and decentralized perpetual futures markets. When funding rates diverge across venues, the strategy takes offsetting spot-long and perpetual-short positions to earn the spread while remaining delta-neutral.

Venues

• Lighter

• Drift

• Hyperliquid

• OKX

• Binance

• Gate

• Bybit

Yield Sources

• Perpetual funding payments

• Price inefficiencies between spot and futures markets

• Borrow rate differentials

Asset Coverage

• High funding rate assets across CEX and perp DEX venues (Dynamically selected based on funding rate opportunities)

Risks and Risk Management

• Smart Contract Risk: Blockchain-based code may contain bugs, vulnerabilities, or economic design flaws that can lead to unintended behaviour, loss of funds, or system failure. Neutral Strategy Vaults have undergone 3 independent audits by Halborn, Quantstamp, and Offside Labs to mitigate Smart Contract Risks.

• Liquidation/ADL Risk: Even with delta-neutral positioning, extreme price movements can trigger forced liquidation or ADL events on futures venues due to margin requirements, insurance fund mechanics, or exchange-specific risk controls.

  • Mitigation:

    • Use of liquid tokens and constant rebalances to reduce ADL rank.

    • Positions are constructed to be delta-neutral in base units, minimizing directional exposure even during periods of elevated volatility.

    • Capital allocation accounts for margin efficiency, cross-margin interactions, and liquidation thresholds across venues.

    • Exposure limits and venue-level caps are enforced to prevent over-concentration and preserve operational resilience.

• Funding Rate Exposure: While price exposure is hedged, funding rate exposure remains. Changes or reversals in funding rates can reduce expected returns or temporarily impact PnL.

  • Mitigation:

    • Funding and borrowing rates are monitored 24/7 continuously, and positions are adjusted when the expected net yield no longer compensates for execution costs or margin usage.

    • The strategy is designed to adapt to rapid funding regime changes, including sign flips and crowding.

• Operational Counterparty Risks: A critical service provider may face financial, operational, or security failures that could impair fund operations. Such events may result in delayed redemptions, suspended token trading, or, in severe cases, loss of the fund’s underlying assets.

  • Mitigation:

    • Copper and Ceffu mitigate centralized exchange counterparty risk by holding assets in independent custody while enabling off-exchange settlement via ClearLoop and MirrorX. Assets remain under custodian control rather than on exchange balance sheets, reducing exposure to exchange insolvency or misuse.

    • Funds are deployed through Neutral Trade’s Neutral Strategy Vaults and protected by Fordefi’s MPC infrastructure. While curators can adjust and manage yield strategies through API access, they have no authority to access or withdraw user assets, with security enforced by robust policies, themselves guarded by Admin Quorum.

    • Assets in Neutral Strategy Vaults are routed only through whitelisted contracts and venues, with deposits processed automatically and no exposure to hot wallets or private keys. This setup enables secure multi-chain trading while restricting activity to pre-approved protocols and tokens.

Transparency

Onchain Wallets:

Fordefi 1 (SOL)

Fordefi 2 (EVM)