> For the complete documentation index, see [llms.txt](https://docs.axis.to/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.axis.to/susdx-the-rewards-vault/how-axis-earns-yield.md). # How Axis Earns Yield Axis earns yield from structural fragmentation across venues, currencies, and settlement systems, capturing price dislocations of the same or related exposure. That fragmentation is Axis's **structural edge**: a durable, market-neutral return source. The bread-and-butter is **cross-venue and cross-currency arbitrage**; **funding-rate positions are used mainly to hedge the spot inventory**, not as a primary source of yield. Current attribution across the strategy is published on the Transparency Dashboard. Market-neutral arbitrage, capturing price differences while hedging out market direction, is an established institutional trading strategy, not a crypto invention. The engine evaluates opportunities offchain and allocates within its risk limits as market conditions change. ## One strategy, many layers Axis runs a **single market-neutral strategy expressed in several layers**, so returns come from multiple, partly independent sources rather than one trade: * **Spot arbitrage, the core.** Capturing price dislocations of the same or related exposure across execution venues, built on **low-latency execution and a microstructure edge**. It spans digital, traditional, and cross-asset markets as those markets become accessible to the strategy. * **Funding rates, the hedging leg.** Spot paired with offsetting perpetuals, so the position earns funding while hedging out broad market direction. * **Delta-neutral basis trades.** Across crypto, other digital assets, and traditional markets, including FX, tokenized equities, and commodities, as those markets become accessible to the strategy. * **Cross-asset arbitrage.** Relative value between related instruments and asset classes. * **Yield-bearing margin.** Margin held in **real-world assets, T-bills and tokenized money-market funds**, earning a return while it backs the actively-managed positions, for additional capital efficiency. Layering these is what makes the book **resilient across market cycles**: when one layer is thin, others can carry, and dislocation and volatility tend to *widen* the opportunity rather than close it. Current attribution across layers is published on the Transparency Dashboard, not fixed here. The four categories detailed below, cross-venue, cross-currency, funding rate, and OTC/RFQ, are the core layers of that single strategy. Realized strategy results can be delivered to the vault as USDx rewards by the reward manager (`fundRewards`, gated by `REWARD_MANAGER_ROLE`). Those rewards vest linearly over a configured window. The live value is a configured parameter, and only the vested portion counts toward vault assets. So the amount of USDx represented by each sUSDx position rises smoothly as rewards vest (see [How Rewards Reach sUSDx](/susdx-the-rewards-vault/reward-distribution.md)). ## 1. Cross-venue arbitrage Cross-venue arbitrage captures fragmentation of the same or closely related exposure across centralized execution venues. It includes exchange-to-exchange spot arbitrage and regional-to-global pricing gaps. For example, if BTC is executable at $60,000 on one exchange and $60,050 on another, a paired trade can buy on the cheaper venue and sell on the more expensive one. The displayed $50 difference is a gross spread, not guaranteed profit: fees, slippage, transfer time, partial fills, custody, and settlement risk determine the realized result. ## 2. Cross-currency arbitrage Cross-currency arbitrage captures fragmentation of the same asset across quote currencies while hedging or converting the currency exposure. For example, a structure can buy BTC in USD and sell BTC in TRY where a premium exists. The premium must remain after FX conversion or hedging, trading costs, settlement timing, local liquidity, banking access, and capital controls. A price difference measured in two currencies is not directly comparable until those effects are included. ## 3. Funding rate arbitrage Funding rate arbitrage is one of the four strategy categories. It pairs a spot position with an offsetting perpetual-futures position to seek funding income while reducing broad market direction. A common example is long spot BTC and an equal short BTC perpetual when funding is positive, so the short side receives funding under the venue's payment convention. The hedge can still lose money if funding reverses, the spot and perpetual prices diverge, margin becomes insufficient, either leg executes incompletely, or a venue restricts access or withdrawals. Equal notional at entry does not guarantee the position remains fully hedged. ## 4. OTC/RFQ Over-the-counter and request-for-quote execution seeks bilateral prices for a defined asset, size, and settlement arrangement. An RFQ lets a trader ask one or more counterparties for an executable quote rather than exposing the full order to a public order book. For example, a trader can request quotes for a block sale from several counterparties and compare each response with an executable market hedge. If the selected bilateral trade and hedge both execute within the cost and risk budget, the remaining spread becomes the intended return. The result depends on quote validity, hedge execution, credit, legal terms, custody, and settlement. ## Why performance varies Opportunities, funding, FX rates, quote availability, interest rates, capacity, costs, and risk change over time. A strategy can be inactive or unattractive, and an expected profitable position can realize less than expected or lose money. Historical performance is not a promised future APY. Realized results reflect offchain trading; the reserves and custody behind them are evidenced separately in [Backing, Custody & Transparency](/backing-reserves-and-transparency/backing-custody-transparency.md). Read [Trading Strategy Overview](/susdx-the-rewards-vault/how-axis-earns-yield/trading-strategies.md) for the strategy taxonomy, [How Rewards Reach sUSDx](/susdx-the-rewards-vault/reward-distribution.md) for the accounting boundary, and [Risk Overview](/risk/risk-overview.md) for failure modes. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.axis.to/susdx-the-rewards-vault/how-axis-earns-yield.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.