Untangled is building vault infrastructure on top of Perps exchanges to enable any managers or DAOs to create delta-neutral strategies to optimise yields.

Delta-neutral strategies have emerged as one of the most effective ways to capture structural yield within DeFi. By neutralizing price exposure while extracting funding and fee revenue from perpetual futures markets, these strategies echo the relative value approaches familiar to institutional investors in traditional finance.

Beyond crypto hedge funds, DeFi-native protocols such as Ethena have adopted this approach at scale, with Ethena surpassing $6.3 billion in TVL. Although centralized exchanges still handle larger volumes, decentralized perpetual exchanges (perp DEXs) have grown significantly. For instance, Hyperliquid, the leading perp DEX, sees around $6 billion in daily trading volume in 2025, which is approximately 10% of Binance's.

This article focuses on the decentralized perpetual ecosystem and outlines how Untangled is building institutional-grade vault infrastructure to capture on-chain yield with full transparency, auditability, and control.

Perpetual futures (perps) were first proposed by Robert Shiller in 1993 as a way to estimate the value of income-generating assets or hedge hard-to-trade instruments. They gained popularity in the cryptocurrency markets for enabling leveraged bets on price movements. For instance, Bitcoin miners use perps to lock in future revenue and reduce volatility. By 2022, perps were among the most heavily traded instruments in crypto.

Unlike traditional futures, which converge to spot prices at expiry, perps have no expiration. They maintain a floating price near spot through a funding rate mechanism: periodic payments between long and short positions.

Perps differ from traditional derivatives in several important ways:

• They can be held indefinitely until closed by the trader.

• Long positions typically pay a funding rate to short positions when the perp price is above spot, and vice versa.

• Funding represents the cost-of-carry, settled peer-to-peer.

• In contrast to variation margin in traditional finance (handled via clearinghouses), DeFi funding is decentralized and designed to balance open interest.

When a trader opens a position on a perp DEX, their trade is matched against either another trader (via orderbook), a liquidity pool (via AMM), or a hybrid system. These design choices affect hedging accuracy, slippage, and rebalancing frequency.

Architectural types of perp DEXs:

• Orderbook (on/off chain): Hyperliquid, dYdX v4, Vertex

• AMM-based: GMX, Jupiter, Ostium

• Hybrid: Drift (vAMM + on-chain orderbook)

• Built on HyperBFT, a custom Layer 1 with HyperEVM

• Liquidity providers deposit into Hyperliquid Provider (HLP), which absorbs unmatched flow

• Yield comes from trading fees and funding imbalance

• Hedging requires querying net open interest via API

• Transparent, index-based funding rates

• GM pools act as counterparties to traders

• Vaults like hedged GLP/GM earn predictable fees but face drift risk

• Per-asset funding uses borrow-fee based model

• Suitable for passive vaults and less frequent rebalancing

• Funding skew determines borrowing cost

• Combines virtual AMM (vAMM) and Just-In-Time market making via DLOB

• Native support for programmable strategy vaults

• Epoch-based resets for efficient rebalancing

• Cross-margin and isolated markets allow multi-asset hedging

• Capped, dynamically tuned funding rates

These models determine whether a hedge earns or pays funding, affecting overall strategy returns.

Delta-neutral vaults aim to exploit inefficiencies in perp markets, especially during sustained imbalances in open interest and funding. This is distinct from directional exposure (e.g., long-BTC), staking-only strategies, or passive ETF-style products.

By combining a yield-bearing LP position with a managed short hedge, delta-neutral vaults offer:

• Positive carry through trading and funding fees

• Neutral price exposure

• Performance resilience across market cycles

A representative implementation is the Hedged Liquidity Pool Model:

• LPs deposit into a perp exchange liquidity pool (e.g., JLP on Jupiter)

• Vault monitors token weights (e.g., 50% SOL, 30% ETH, 20% BTC)

• Vault shorts the same assets on the same or another perp exchange

• Objective: neutralize delta while capturing yield from both sides

Delta-neutral strategy success depends on multiple profit drivers and their optimization. Below is a summary framework for assessing PnL components:

Delta-neutral strategies represent a compelling frontier in DeFi yield generation, offering institutional-grade products with risk-mitigated returns. As DEX perps mature in liquidity and infrastructure, the opportunity to deploy smart, capital-efficient strategies at scale continues to expand. Untangled is building the infrastructure to power these vaults—transparent, modular, and chain-agnostic—enabling asset managers and DAOs to deploy delta-neutral strategies that harness crypto-native yield opportunities without taking on directional market risk.

Untangled is building vault infrastructure on top of Perps exchanges to enable any managers or DAOs to create delta-neutral strategies to optimise yields.

Delta-neutral strategies have emerged as one of the most effective ways to capture structural yield within DeFi. By neutralizing price exposure while extracting funding and fee revenue from perpetual futures markets, these strategies echo the relative value approaches familiar to institutional investors in traditional finance.

Beyond crypto hedge funds, DeFi-native protocols such as Ethena have adopted this approach at scale, with Ethena surpassing $6.3 billion in TVL. Although centralized exchanges still handle larger volumes, decentralized perpetual exchanges (perp DEXs) have grown significantly. For instance, Hyperliquid, the leading perp DEX, sees around $6 billion in daily trading volume in 2025, which is approximately 10% of Binance's.

This article focuses on the decentralized perpetual ecosystem and outlines how Untangled is building institutional-grade vault infrastructure to capture on-chain yield with full transparency, auditability, and control.

Perpetual futures (perps) were first proposed by Robert Shiller in 1993 as a way to estimate the value of income-generating assets or hedge hard-to-trade instruments. They gained popularity in the cryptocurrency markets for enabling leveraged bets on price movements. For instance, Bitcoin miners use perps to lock in future revenue and reduce volatility. By 2022, perps were among the most heavily traded instruments in crypto.

Unlike traditional futures, which converge to spot prices at expiry, perps have no expiration. They maintain a floating price near spot through a funding rate mechanism: periodic payments between long and short positions.

Perps differ from traditional derivatives in several important ways:

• They can be held indefinitely until closed by the trader.

• Long positions typically pay a funding rate to short positions when the perp price is above spot, and vice versa.

• Funding represents the cost-of-carry, settled peer-to-peer.

• In contrast to variation margin in traditional finance (handled via clearinghouses), DeFi funding is decentralized and designed to balance open interest.

When a trader opens a position on a perp DEX, their trade is matched against either another trader (via orderbook), a liquidity pool (via AMM), or a hybrid system. These design choices affect hedging accuracy, slippage, and rebalancing frequency.

Architectural types of perp DEXs:

• Orderbook (on/off chain): Hyperliquid, dYdX v4, Vertex

• AMM-based: GMX, Jupiter, Ostium

• Hybrid: Drift (vAMM + on-chain orderbook)

• Built on HyperBFT, a custom Layer 1 with HyperEVM

• Liquidity providers deposit into Hyperliquid Provider (HLP), which absorbs unmatched flow

• Yield comes from trading fees and funding imbalance

• Hedging requires querying net open interest via API

• Transparent, index-based funding rates

• GM pools act as counterparties to traders

• Vaults like hedged GLP/GM earn predictable fees but face drift risk

• Per-asset funding uses borrow-fee based model

• Suitable for passive vaults and less frequent rebalancing

• Funding skew determines borrowing cost

• Combines virtual AMM (vAMM) and Just-In-Time market making via DLOB

• Native support for programmable strategy vaults

• Epoch-based resets for efficient rebalancing

• Cross-margin and isolated markets allow multi-asset hedging

• Capped, dynamically tuned funding rates

These models determine whether a hedge earns or pays funding, affecting overall strategy returns.

Delta-neutral vaults aim to exploit inefficiencies in perp markets, especially during sustained imbalances in open interest and funding. This is distinct from directional exposure (e.g., long-BTC), staking-only strategies, or passive ETF-style products.

By combining a yield-bearing LP position with a managed short hedge, delta-neutral vaults offer:

• Positive carry through trading and funding fees

• Neutral price exposure

• Performance resilience across market cycles

A representative implementation is the Hedged Liquidity Pool Model:

• LPs deposit into a perp exchange liquidity pool (e.g., JLP on Jupiter)

• Vault monitors token weights (e.g., 50% SOL, 30% ETH, 20% BTC)

• Vault shorts the same assets on the same or another perp exchange

• Objective: neutralize delta while capturing yield from both sides

Delta-neutral strategy success depends on multiple profit drivers and their optimization. Below is a summary framework for assessing PnL components:

Delta-neutral strategies represent a compelling frontier in DeFi yield generation, offering institutional-grade products with risk-mitigated returns. As DEX perps mature in liquidity and infrastructure, the opportunity to deploy smart, capital-efficient strategies at scale continues to expand. Untangled is building the infrastructure to power these vaults—transparent, modular, and chain-agnostic—enabling asset managers and DAOs to deploy delta-neutral strategies that harness crypto-native yield opportunities without taking on directional market risk.