Key Features

Delta-Neutral Architecture

Main St employs sophisticated hedging techniques that shield msUSD from crypto market volatility. Our options-based strategies maintain dollar-value stability through carefully balanced exposures and continuous risk management.

Options Arbitrage Mechanics

Our primary strategy utilizes volatility arbitrage principles to generate yield:

During Volatility Spikes: When market volatility increases, our dynamic hedging protocols automatically adjust position exposure. For example, if BTC's price rapidly moves from $90,000 to $80,000, our system rebalances delta exposure by selling BTC to offset the increased positive delta from our short put options in a short straddle position, or by adjusting hedges for long straddle positions to maintain market neutrality despite price movements.

During Volatility Compression: When markets calm after pricing in high volatility, our short straddle positions capture the premium difference. For instance, if the market priced in 80% implied volatility but realized only 60%, our short options positions generate profit from both time decay and volatility convergence.

During Volatility Expansion: When our models predict realized volatility will exceed implied volatility, we can utilize long straddle positions that benefit when actual market movements exceed expectations, capturing profit from increasing option values.

Strategy Diversification

Main St continuously optimizes capital allocation across multiple volatility-based strategies:

• Directional Straddles: Core positions that can be either long or short based on volatility forecasts

• Term Structure Trades: Exploiting differences between short and long-dated option implied volatilities

• Cross-Asset Volatility Spreads: Identifying relative value opportunities between BTC and ETH volatility markets

• Supplementary Basis Trades: Deployed when options markets offer suboptimal yields

Market-Neutral Protection

Our positions maintain stability across even extreme market scenarios:

During Market Surges: When BTC experiences significant upward price movements, our delta hedging automatically adjusts to offset directional exposure, preserving dollar-value stability regardless of magnitude.

During Market Crashes: When BTC undergoes sharp corrections, our balanced position management ensures downside protection while maintaining the target coverage ratio for msUSD holders.