FAQ

Frequently Asked Questions

🔄 What is a Delta-Neutral Strategy?

A delta-neutral strategy creates a portfolio that maintains its value regardless of market movements. By combining long and short positions of equal size, gains in one position offset losses in the other, effectively eliminating directional risk. While protected from price movements, these strategies can still generate returns through other market mechanisms like funding rates.

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🔄 What are Perpetual Futures?

Perpetual futures are derivative contracts that never expire, unlike traditional futures. They track an underlying asset's price and are widely used in crypto markets. The key feature is their funding rate mechanism - periodic payments between longs and shorts that help keep the futures price aligned with the spot price.

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💰 What are Funding Rates?

Funding rates are periodic payments exchanged between long and short position holders in perpetual futures markets. When the futures price is higher than spot, longs pay shorts (positive funding rate). When futures price is lower, shorts pay longs (negative funding rate). This mechanism helps keep futures prices aligned with spot prices.

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⚡ What is Hyperliquid?

Hyperliquid is a high-performance Layer 1 blockchain specifically optimized for on-chain financial applications. Key features include:

• Sub-second block latency

• 100k orders/second capacity

• Fully on-chain order book for perpetual futures

• Custom consensus algorithm (HyperBFT)

• Native support for financial applications

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🔍 How are Positions Sized?

Position sizing depends on your input amount and chosen leverage. For a $1000 position at 2x leverage:

• $666.67 goes to spot position

• $333.33 goes to futures position (2x leveraged = $666.67 exposure) This creates balanced $666.67 exposure on both sides.

⚠️ What are the Risks?

While delta-neutral strategies minimize directional risk, users should be aware of:

Market Risks:

• Liquidation potential at higher leverage

• Funding rate fluctuations

• Market volatility impact

Technical Risks:

• Smart contract vulnerability exposure

• Bridge-related risks

• Network congestion effects

• Slippage during execution

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