Akropolis
  • 🕶️Introduction
  • 🧠Using Akropolis
  • 💸Products
    • 🌀Vortex
      • 💫Overview
      • 💻How it works
      • 🛣️Roadmap
      • ✍️Competitor Comparison
    • 🎆Yearn Integration
    • 💜AKRO staking
  • 🏛️Governance
    • 🟣AKRO token
    • 📋Governance process
  • 🏗️Developer documentation
    • 💫Vortex
      • 👓High-Level View
      • 🍭Contract Design
      • 🌾Key Function - harvest
      • 🧑‍💻🧑💻 Integration guide
      • ❗Risk Management
        • Position Buffer
        • remargin()
        • unwind()
        • emergencyExit()
        • Funding Rate Monitoring
    • 🚦Deployed Contracts
      • Vortex
        • Testnet contracts
    • 🐧Open Source Development
      • Amun Ra
      • Pensify
      • C2FC
      • AkropolisOS
      • Sparta
      • Delphi
      • Polkahub
      • Ethereum <-> Substrate bridge
      • Web3 Wallet Kit
      • Substrate Staking portal
  • 🔐Security
    • 🔮Audits
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  • 📚Additional Resources
    • 📑FAQ
    • 💥Community Channels
    • 📓Basis Trading and Perpetual Contracts
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On this page
  • High-level example
  • How Vortex applies Basis Trading
  1. Products
  2. Vortex

How it works

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Last updated 3 years ago

High-level example

Here’s a high-level example of how Vortex works in favorable conditions:

Assuming 1 ETH = 3500 USDC

  1. User deposits 7000 USDC into Vortex, receiving a proportionate share of the pool as Vault Tokens.

  2. Vortex’s underlying strategy will then:

    1. Send 3500 USDC to a decentralized exchange to buy 1 ‘physical’ ETH;

    2. Send 3500 USDC to a decentralized derivatives exchange and use it as collateral to short 1 ETH worth of Perpetual Contracts.

  3. Vortex will automatically collect the Funding Rate and periodically compound and rebalance into both positions, increasing the value of the Vault Tokens.

Vortex utilizes a Basis Trading strategy.

How Vortex applies Basis Trading

The crypto markets have historically been weighted towards longs as the majority of participants speculate that prices will go up.

This trend has continued on decentralized derivatives exchanges that offer Perpetual Contracts, which means that Funding Rates have historically, on average, been positive. As a result, from a Funding Rate perspective, it has been profitable to open short positions - but then you may lose a lot more than your Funding Rate returns if prices suddenly moon.

Vortex fixes this by removing the directional price risk from the short position while maintaining the Funding Rate advantage, enabling users to generate market-neutral yields.

To learn more about Basis Trading and Perpetual contracts, please visit:

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📓Basis Trading and Perpetual Contracts