Yield & Strategy

The yield generated by SHRED comes directly from funding fees paid by traders on perpetual futures exchanges like Hyperliquid. These funding payments are real, market-driven revenues — not emissions or subsidies.

SHRED targets a 15% APY*. To achieve this, the protocol employs a delta-neutral arbitrage strategy. This involves holding offsetting long and short positions so that directional exposure to the market (delta) is zero. The result is a portfolio that earns yield from perps funding rates without exposure to asset price swings.

To smooth out fluctuations, SHRED maintains a buffer fund. This reserve absorbs short-term dips in funding rates, helping users receive stable yields. While prolonged negative funding rate environments could lower yields, such periods have historically been rare and temporary.

Initially, SHRED will support deposits in USDC and then USDT next — which are fully backed stablecoins that are widely used across DeFi and institutional markets. Future integrations may include regulated alternatives like USDe or USDH, but algorithmic or synthetic assets are deliberately excluded for now. *Note - The target 15% APY, which we call the watermark, is subject to change in the future due to market conditions such as prolonged negative funding rates during a bear market.