Basis Vault acts as an automated delta-neutral basis trading strategy.It buys the spot asset on a decentralized exchange and opens a corresponding leveraged short position on Hyperliquid.Basis Vault automatically readjusts leverage to optimize capital utilization and hedge against liquidation risk.Users earn interest on the provided notional asset by capturing the positive funding rate on the leveraged short position.

Very frequent rebalancing creates fees that can offset yields. That's why the algorithm determines the maximum capital utilization rate and manages leverage on Hyperliquid. In most cases, leverage is set to 2x-5x.

Basis Vaults are affected by spread between futures and spot prices. High spreads can result in negative performance of the strategy.

The protocol relies on trusted third-party protocols such as Chainlink, Hyperliquid, Arbitrum, Base, Solana, Stargate, Jupiter, Uniswap, and others. There is a chance that one of these protocols could be temporarily offline. Depending on the situation, the algorithm will implement one of the pre-determined safety measures and do its best to mitigate liquidity risks.

Funding rates can turn negative for a long period of time, creating a downside for the strategy. However, historical data from major DEXs and CEXs shows that the funding rate is mostly positive YoY. Funding rates are determined by the market and affect performance.

To address smart-contract risks, all strategies have been audited by Hexens, but this does not guarantee anything.

Please be aware that no measures taken guarantee safety, and any interaction with the protocol can result in temporary or permanent loss of funds. The list of risks is not exhaustive. You act at your own risk, and the protocol is not responsible for any potential losses. If you have any questions, we probably don't have answers.