Basis Trading Implementation

The Bitcoin and Eth cash and carry trade provides another complementary yield strategy during periods of strong backwardation in futures markets. While this approach has been widely popularized through protocols like Ethena, it serves as a secondary strategy within Main St's framework.

This approach continues to offer value through:

• Reliable yield generation during periods of high funding rates

• Portfolio diversification to complement our options-focused approach

• Established infrastructure for efficient execution

Market Structure Approach

Our strategy utilizes persistent market patterns where derivatives pricing creates predictable payment flows:

1. Establishing balanced positions across multiple venues

2. Capturing pricing differentials between related instruments

3. Collecting periodic payments from market mechanisms

   1. Establishing balanced positions across multiple venues

   2. Capturing pricing differentials between related instruments

   3. Collecting periodic payments from market mechanisms

This creates a position protected from price volatility while generating yield regardless of market direction.

Implementation

The strategy focuses on systematic yield capture from established market structures. By maintaining position neutrality to minimize directional exposure, it delivers returns independent of price movement in the underlying assets.

Performance Context

The strategy typically generates:

• Daily yields within expected parameters

• Monthly returns that compound over time

• Annualized performance that varies with market conditions

Sonic's infrastructure enables optimized execution with reduced friction and improved position management.

Performance varies based on market conditions

Capital Allocation Techniques

Main St employs position management techniques to balance capital efficiency with risk parameters.

Position Types

Our approach utilizes two complementary position structures:

Stablecoin-Denominated Positions

These positions enable performance tracking in dollar terms and flexible deployment across multiple assets. They support efficient capital utilization while allowing adjustment based on evolving market conditions.

• Performance tracking in dollar terms

• Flexible deployment across multiple assets

• Efficient capital utilization

• Adaptive positioning based on market conditions

Native-Denominated Positions

This approach features automatic collateral optimization as markets fluctuate and provides inherent protection against sudden price movements. It reduces unnecessary conversion requirements while offering performance advantages in certain market environments.

• Automatic collateral optimization

• Inherent protection against sudden movements

• Reduced conversion requirements

• Performance advantages in specific environments

Strategy Management

Position management adapts based on market analysis including volatility assessment, yield evaluation, and risk metrics. This approach maintains neutral exposure while seeking returns across different market environments.