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Overview

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What is Unbound?

Unbound is a Delta-Neutral BTC Yield Vault that generates yield by capturing funding rate payments on perpetual futures exchanges. Users deposit wBTC and earn passive income without directional exposure to BTC price.

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The Opportunity

On perpetual futures exchanges, traders pay or receive funding rates every hour to keep the perpetual price aligned with spot:
Market ConditionFunding RateWho Pays
Bullish (more longs)PositiveLongs pay Shorts
Bearish (more shorts)NegativeShorts pay Longs
Historically, funding rates are positive ~84% of the time because traders are generally bullish on BTC.

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The Delta-Neutral Strategy

Unbound captures this yield through a hedged strategy:
  1. Keep 50% as wBTC in the vault (LONG exposure)
  2. Swap 50% to USDC and deposit to Extended exchange
  3. Open SHORT position equal to wBTC value held (matches the hedge)
  4. Collect funding when rate is positive (shorts receive payments)
  5. Close position when funding turns negative (avoid paying)

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Why It’s Delta-Neutral

Portfolio Breakdown:
├── 50% wBTC in vault    = +0.5 BTC exposure (LONG)
├── 50% USDC in Extended = $0 BTC exposure (margin for short)
└── SHORT position       = -0.5 BTC exposure
                          ─────────────────
                     Net = 0 BTC exposure (NEUTRAL)
BTC price movements are hedged: if BTC goes up, the wBTC gains offset the short losses. If BTC goes down, the short gains offset the wBTC losses.

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How Funding Payments Work

Extended uses this formula: 
Funding Payment = Position Size × Mark Price × Funding Rate
  • If funding > 0: Your SHORT receives payment from longs
  • If funding < 0: Your SHORT pays to longs
Example with $5,000 deposit:
  • wBTC kept in vault: $2,500 (LONG)
  • USDC to Extended: 2,500→opens2,500 → opens 2,500 SHORT (matches wBTC value)
  • Position size: ~0.0284 BTC (at $88,000)
  • Funding rate: 0.0013%/hr
  • Hourly payment: ~$0.032
  • Daily payment: ~$0.78
  • Annual payment: ~$285 (~5-6% APY on total deposit)

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How It Benefits Users

BenefitDescription
Passive Income~5-12% APY depending on market conditions
No Price RiskDelta-neutral means no exposure to BTC volatility
AutomatedStrategy runs 24/7 without user intervention
TokenizedVault shares (uBTC) are ERC-20 tokens

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Typical APY Range

Market ConditionFunding RateAPY on Total Deposit
Low demand0.001%/hr~4%
Normal0.0015%/hr~6%
High demand0.003%/hr~12%
Funding rates vary based on market sentiment. Current rate may be higher or lower.

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What Unbound Does NOT Do

  • ❌ Guarantee profits (funding can be negative)
  • ❌ Provide insurance against exchange risk
  • ❌ Allow individual position management