Overview
Straddle is a deltra-neutral, dollar-denominated vault built to demonstrate the potential of Theo's infrastructure. Straddle utilizes both Hyperliquid and Aave to capture the funding rate for Ethereum perpetuals with leverage, while remaining delta-neutral.
The Straddle smart contract operates in weekly rounds. Deposits and withdrawals are processed when the round rolls over.
Mechanism
The basic mechanism of Straddle is as follows:
Users deposit ETH into the vault. Deposits are finalized at the start of the next round.
All deposited ETH is supplied to Aave.
USDC is borrowed from Aave.
Of this, a portion is swapped for ETH and supplied back to Aave.
The remainder is bridged to Hyperliquid and used to short ETH with leverage.
As the ETH price fluctuates, Theo automatically rebalances collateral between the two execution environments.
At any time, users can initiate a withdrawal. At the start of the next round, a corresponding amount of strategy assets are returned to the vault and withdrawals can be completed.
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