Aegis at $0TVL Hour: Yield-Bearing Stablecoins with BTC Basis and JLP Hedge Strategies

Hi, I am Arman. I am co-founder and CEO of Aegis. Uh we are building institutional grade yieldbearing stable coins uh with DIY composibility. So we launched last year in March. We gathered around 50 million of TVL at peak.

Right now we're sitting at around 40. Um we have uh integrations with uh taxes and taxes. Uh our yield bearing stable coins are used as trading collateral across all orderly based um dexes including radium. We also have integration with UX. Uh so it's a text integration.

We are deployed across multiple chains including Ethereum, Katana Base, Avalanche uh and others. uh we have uh deep partnerships with them including some incentives for the end users. We also deployed across landing markets like Moro, Gearbox, Oiler. We worked with uh the biggest curators and TVL providers in the space. Most of them became investors on our cap table including like flowes and we had one of the second biggest poll on Oiler on BNB chain in terms of TVL and we had one of the best performing uh pools in terms of APY on Pendle.

Um so yeah when it comes to the core products we have two uh stable coins. The first one is uh BTC backed uh basic basically BTC basis trade uh stable coin. What we do we go long BTC and we hedge it one to one with BTC margin perpetual shorts. We earn funding rate on our short positions. We distribute it as a yield.

We take 10% performance fee cut from that. And that's basically how this product works. uh why we chose BTC margin pers to hedge uh bitcoin is basically that we uh put risk management on the first place uh so we don't didn't want to have any exposure to other stable coins or have a risk of liquidation on on the short side so basically with BTC margin per you are protected from that in in in case if you are using the US USDT margin pers anything happens with USDT let's say a dpack you can be liquid liquidated on the short side. So we don't have that risk because we are using BTC margin uh futures. Uh and we also have another stable coin with a GLP hedge strategy.

Uh what we do we go uh we buy GLP which is a native token of Jupiter exchange on Salana. It has inherent yield in embedded into it. Uh basically they have they accumulating fees from the trading on Jupiter and liquidation fees. Um and we hedge everything that is inside of GLP because GLP acts as an index. Uh so they have Bitcoin, Salana, Ethereum in it.

So we hedge that and we have yield from GLP and we had have yield from the funding rates on the short side and on both of the products we are delta neutral and we don't use leverage. So essentially that means we are not exposed to the movement of the underlying assets and also we don't have any leverage. So uh in case of the severe price movements in the uh in the underlying assets we are kind of like protected from that and the yield is you can see the yield uh the current yield on both products. Um so yeah and one of the features that we introduced with the stable coins because if you look at the at the overall market in order to receive yield you need to have staking or stake uh the stable coin in order to receive yield. In our case you don't need that.

So basically we have direct yield uh feature. So any product any fintech app or we have we have proven that with orderly network integration and VUAX. So basically user just buys our stable coin and holds it on on a wallet or or on their account and they don't do don't need to do anything with it. They receive yield directly. They don't need to do staking.

But we have staking options as well. Uh so if um a DIY native user prefers staking, we have staking as well. So we did multiple integrations. We are talking to some crypto wallets like Coinomi and uh some guys like Etherfy about this uh product uh integration and we obviously have stable coin as a service because we have rigorous infrastructure in place including smart contracts and also custody infrastructure for both of our products. We use copper and sephu.

So that means we never move the collateral to the exchange itself when we perform the trading. So it sits within the custody and uh the settlement happens offchain through the clear loop solution and mirror X. Um so yeah the stable coin as a service we can we kind of like provide this infrastructure to uh fintech apps to banks uh who are interested in launching their own stable coins or even D5 projects. We have three uh customers in the pipeline. Unfortunately, I cannot reveal the names but uh this uh product is also getting some um product market fit.

Uh in terms of the team, uh I'm a co-founder and CEO. My background is in finance. The rest of the team is mostly uh DeFi native guys and also uh with guys with the HFT background. In terms of advisors, we have uh pretty strong names as well like head of crypto at layer zero and also stable coin lead at Pendle and uh the ex director of paradigm and uh uh UBS. So yeah, why why do we have the edge and what's our edge?

It's basically our background and our core backers. Uh it's Riverside Hedge, which is uh one of the biggest market makers in the space. They do around 30 billion monthly trading volumes across Texas and Dexes. uh they are like top four on aster and top five on lighter in terms of volumes and they transferred part of their team and trading technology to us. So everything that we do when it comes to trading and executing the the strategies we do inhouse.

So we don't rely on any external parties what you you would usually see in some D5 pro protocols. So we control the risk management and the trading operation side uh in house. So yeah, in terms of the road map, I think we are focusing on improving our risk management practices and uh launching new products that would diversify our yield. Uh as you may know, the real trend is RWAS. So we're looking into that as well.

We have u planned to diversify the yield and uh include some RWAs specifically CLLOs's tokenized CLOS's uh as a part of our portfolio and the backing um and we have a good partner for that uh we are talking to multiple parties like Maple and uh Galaxy to co-launch this product. So yeah, I think in terms of the next steps, we will be uh focusing on diversifying the portfolio and uh scaling the TVL through multiple integrations with cryptocards, D5 wallets and uh fintech apps. So yeah, uh that's it uh from my side. So yeah, you can visit our website which is agis.im and uh check check out the the products yourself.

Thank you. How do we start? Okay. Uh so I will have first question for you. Uh thanks for presentation.

Uh so my question is like how sustainable is is the yield uh API you showed 10% on stable and 6.5 on on bitcoin because the main source is uh it's uh perpetual funding rate right

that's correct

that one can get even negative in certain scenarios

that's a good question uh so if you look historically like for the past 5 years 87% of the time funding rates were positive positive and only 13% they were negative. That's actually what we see currently in the market. But if you average out for the past 5 years, the average APY was around 10% uh on the funding rate uh on this basis rate strategy. On the GLP hedge side, uh that is also dependent on the market. Obviously retail u you know activity of the retail dropped off significantly.

So open interest on GLP dropped off dropped off as well. You currently cannot earn this 10%. But uh you can easily so what the yield that we get right now is around 7%. So for the past year it was uh 15%. So once the retail comes back the yields will will get back as well.

But uh that's why we are looking to diversify into more uh let's say uncorrelated strategies uh so that we have this diversification in case there is a bare market. But yeah, so uh the yields are not sustainable uh short term, but long term they're pretty stable.

Okay, thanks.

So I've seen you've got multiple audits, but how do you handle the operational security? I guess a lot of things happen offchain. How are users safe giving you their money offchain?

Yeah. Uh that's a good question and I think uh especi specifically after the you know resolve incident uh so we don't when we designed the protocol from the beginning uh first of all we don't have any god mode admin role uh that can basically execute mint that is uncolor collateralized uh and we also have different protection mechanisms you cannot protect from be protected from that 100% Right. Uh but what we do, we do systematic reviews of the operational security. We also have mint caps. So you cannot mint unlimited amount of YUSD or JUSD.

We also have oracle checks. Uh so whenever the mint transaction is happening, there is an oracle chain link redstone uh that are checking the price of the underlying and underlying is only USDT or USDC. So you cannot mint with an with an exotic asset uh our stable coin. And the third thing is uh basically yeah there is no one private key or AOA that can sign the transaction or get the rights to mint without KYC and QB. So every menter we basically know them because there is a mandatory QB QIC for that.

Thank you.

I had a couple questions for you. Um, one is how are you different than Athena? Two is uh who is your counterparty for your per and your futures and what are your major risks?

Yeah. So basically how are differing different different from Athena? So Athena is kind of like abandoning delta neutral uh strategy uh in general but uh at the beginning they were using USDT margin per to hedge the positions and that's the main differentiator. So we don't use USDT margin burps to hedge the position. So we don't have the USDT risk embedded into us in case of Athena if something happens with USDT because your co asset is USDT BTC USDT pair will shoot up in price if USDT backs and that means and you are holding short uh against your Bitcoin or like Ethereum doesn't matter.

So basically the price will shoot up and you get liquidated on the short side that means you lose the collateral. If you lose the collateral, you lo lose the pack. In our case, it's BTC margin per so anything happens with USDT or other assets. Our quote asset is USD. So liquidation risk is super super small.

And the counterparties we we hedge on OKX and BBIT and Binance. These are like our main venues. So on those venues you have different protection mechanisms. Obvious obviously you're not protected 100%. But uh that's the same for for every you know trader or project that is doing some hedging on the centralized exchanges.

So yeah uh the counterparty is basically other traders on OKX by bit Binance I suppose. Yeah. And we also uh one one good uh uh thing to to mention we have uh basically the ADL uh also kind of like all always mentioned by uh investors and LPS like how I protect from ADL and ADL protection uh is already embedded into those exchanges uh as a feature. So before you need needed to to agree with the uh exchange but now you have that as a feature.