Long the asset. Short the same asset. The unit is the difference between them.
Read how it holdsTwo positions. Equal and opposite. Neither moves without the other.
Each unit is backed by a spot position, held against an equal short perpetual position.
If the market moves up, the spot gains and the short loses, in equal measure. If it moves down, the reverse is true. The package is designed to hold its value regardless of direction.
Yield comes from perpetual funding payments, not from emissions or new issuance.
A spot position. Holds the underlying asset directly, at custody.
An equal and opposite position, held on a derivatives venue.
Supply expands when a new unit is created against a fresh hedge, and contracts when a unit is redeemed and its hedge is unwound. Nobody borrows anything into existence for the unit to exist.
Suppose perpetual funding averages 6% annualized over a period, paid by short positions to long positions. Before costs, that funding accrues to the unit's reserve.
If funding runs negative instead, the reserve shrinks rather than grows. Funding direction is set by the market, not by Calta.
Illustrative only. Not a historical result. Funding rates vary and can go negative for extended periods.
Two legs, two named parties. The spot position and the hedge settle through separate Daml contracts. Custodian, venue, and unit holder each see only their own leg.
Privacy for a hedged position. A visible position is a target. Canton's sub-transaction privacy keeps size and timing from leaking to the rest of the market.
Settled together. The Global Synchronizer settles both legs atomically, so neither can execute without the other completing. This narrows the window in which the two legs can drift apart.
Value comes from over-collateralized crypto locked against a loan. Supply expands when someone borrows against collateral.
Value comes from a spot position balanced by an equal short. Supply expands when a new unit is created against a fresh hedge.
Funding can run negative. When it does, holding the hedge costs money instead of paying it.
The short leg depends on a venue. If that venue fails or restricts withdrawals, the hedge is impaired.
The two legs can drift apart briefly during volatile markets, before the next settlement brings them back in line.
Redeeming a unit requires unwinding the hedge. In a fast or illiquid market, that can take longer and cost more than usual.
This is not a bank deposit. It is not insured. It can lose value.
Contact: reserve@calta.site