Arbitrage Layer: Delta-Neutral Capital Arms

The Arbitrage Layer is the protocol’s most capital-efficient engine - deploying bots that extract funding rate arbitrage and mispricing opportunities across connected perps DEXs.

It operates through delta-neutral positioning - taking long/short exposure across DEXs with divergent funding rates, and harvesting the spread without directional bias.

Strategy Logic:

• Monitor funding rates across Hyperliquid, Aevo, and Flex Perpetuals (future)

• Identify positive/negative skew windows

• Execute long/short exposure with balanced notional

• Close/reverse positions as funding normalizes or invert skew is detected

• Optional LP-simulated hedges for better capital retention

Risk Controls:

• Auto-unwind on volatility spike

• Max funding spread deviation

• Collateral buffer reserve

• Oracle-based pricing sanity checks

Deployment:

• Only available via strategy vaults (not user-deployed for now) → protocol owned only as adequate risk management is determined to protocol standards

• Requires larger TVL (min $20K per vault for efficiency)

• Strategist-deployed with full transparency of position parameters

Yield Mechanics:

• Earns 95% of net funding spread; protocol fee is net 5%

• 5% protocol performance fee from gross profits

• Liquidity providers (vault depositors) earn yield without market exposure

The Arbitrage Layer is where delta-neutral capital goes to work - built not for exposure, but for extraction.