> For the complete documentation index, see [llms.txt](https://delpho.gitbook.io/delpho-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://delpho.gitbook.io/delpho-docs/how-delpho-works/yield-engine-delta-neutral.md).

# The yield engine: funding capture

The yield in sUSDV comes from perpetual funding payments on Hyperliquid. The protocol runs a hedged carry trade with the user's collateral as the base. When funding is positive, the short leg of the hedge receives the payment. That payment, net of borrow costs and reserves, is what flows to sUSDV stakers.

For current parameters, see [Parameters](/delpho-docs/parameters.md).

## What funding is

Perpetual futures have no expiry date. To keep the perp price tethered to spot, the funding rate creates a periodic payment between long and short holders. When traders crowd into leveraged longs and push the perp price above spot, longs pay shorts. When they push it below spot, shorts pay longs. On Hyperliquid, funding is paid hourly.

The size of the payment varies with how aggressively traders are crowding into leverage. The payment exists because perpetual contracts need a price-anchoring mechanism, not because the protocol designed a yield instrument. Delpho captures a payment that already exists in the market.

## How the hedge is structured

There are two collateral paths. The hedge structure differs by path.

### HYPE / kHYPE collateral path

The user came in already long HYPE and wants to stay long. Delpho uses the borrow capacity created by the deposit to buy more HYPE on spot, then opens a short on HYPE perpetuals against the extra exposure. The short cancels only the borrowed extra, preserving the user's original directional bet on HYPE. The user keeps the upside if HYPE rallies, feels the downside if HYPE sells off, and the protocol's short captures funding on top.

### Stablecoin collateral path

The user has no HYPE exposure to preserve. The protocol uses the deposited stables to buy HYPE on spot and shorts an equivalent HYPE perp, leaving net HYPE delta near zero. The user's exposure is to the dollar asset and to the strategy spread, not to HYPE direction.

<table><thead><tr><th width="109">Path</th><th width="115">User collateral</th><th>Protocol spot leg</th><th>Protocol perp leg</th><th width="121">User HYPE exposure</th><th>Funding capture</th></tr></thead><tbody><tr><td>HYPE / kHYPE</td><td>1x HYPE</td><td>+0.65x HYPE (from minted USDV)</td><td>−0.65x HYPE perp</td><td>1x preserved</td><td>On the 0.65x short</td></tr><tr><td>Stablecoin</td><td>1x stables</td><td>+X HYPE (protocol-funded)</td><td>−X HYPE perp</td><td>0 (delta-neutral)</td><td>On the X short</td></tr></tbody></table>

<figure><img src="/files/wxCW1QWdi6zTFDLQSNCG" alt=""><figcaption></figcaption></figure>

## What sUSDV stakers receive

The income equation is:

> gross funding income - borrow interest - protocol / reserve costs = net yield to sUSDV

Funding is the raw revenue line. Borrow interest is the cost of the spot-long side of the hedge on the lending venue. Protocol / reserve costs are the share routed to the treasury reserve and operational expenses. The remainder accrues to sUSDV.

This means the yield is variable. In low-funding periods it compresses. In sustained negative funding, what is normally an income stream for sUSDV turns into a cost, and the yield can fall to zero or accrue negatively.

## Historical reference point

Across the trailing 180 days on Hyperliquid through 5 May 2026, hourly HYPE perp funding has been positive in roughly 90% of intervals. Past distribution does not bind future distribution. Funding can compress, flip negative, and stay negative through forced unwinds and reversed positioning.

The October 10, 2025 ADL crash, in which HYPE perp funding annualized to -1,650% briefly, is the worst case in the dataset.

For the full backtest of that event, see [Stress test results](/delpho-docs/risk/stress-test-results.md) .