· 4 min read

OPB: The OpenDelta Perpetual Bond

Introducing OpenDelta's first product, the OpenDelta Perpetual Bond.

OPB: The OpenDelta Perpetual Bond

Today we'd like to introduce OpenDelta's first product, the OpenDelta Perpetual Bond (OPB). OPB is currently in beta and will go live on Solana later this summer.

What is OPB?

OpenDelta Perpetual Bond (OPB) is a dollar-denominated, yield-bearing asset designed for stable value accrual. OPB is an on-chain instrument that's backed by a delta-neutral hedged Bitcoin position. This position is price-stable in dollar terms and accrues yield from the funding rate in derivatives markets.

OPB is a tokenized representation of a hedged Bitcoin position. OPB takes this entire position, including its native yield accrual, and wraps that into a token on Solana that can be held and transferred on-chain and utilized as a composable collateral asset in DeFi.

Because the collateral backing the position is perfectly hedged, the position is price-stable in dollar terms while also earning continuous yield whenever funding rates are positive. This makes OPB an excellent alternative for users looking to diversify their stablecoin holdings and earn sustainable, market-driven yield.

In this post, we'll cover the basic mechanics behind how OPB works, how it does so in a trust-minimized way, and the unique features that it holds.

How does OPB work?

OPB is created when a user deposits collateral (initially BTC) with OpenDelta. OpenDelta uses that collateral to enter into a position on a Bitcoin derivatives exchange– we simultaneously hold spot BTC, while also opening up a 1x short position in an inversely priced perpetual swap. This position is considered delta-neutral because it is perfectly hedged– as a result, the underlying position is stable in dollar terms.

In addition to being dollar-stable, this position can earn yield on an ongoing basis. In derivatives markets, funding rates refer to periodic payments made from one side of the market to the other to help balance out the price of the derivative vs. the underlying asset. Whenever the funding rate is positive (longs are paying shorts), the position held by OpenDelta earns interest.

This position is then tokenized and minted on-chain as OPB. Users who mint can take full advantage of OPB as a fully composable on-chain asset. It can be held, transferred, and utilized throughout the Solana DeFi ecosystem.

OPB is a single token that represents this entire position– dollar-denominated principal, plus automated accumulation of any positive yield. This token exists as a Solana SPL token with the native interest-bearing extension, meaning yield is automatically distributed to token holders on a continuous basis without requiring any staking or lockups.

Trust-Minimized Infrastructure

OpenDelta's products are all built on top of trust-minimized infrastructure that allows us to bridge CeFi liquidity into DeFi with minimum counterparty risk and maximum security.

Whenever a user deposits collateral to mint OPB, that collateral moves directly to an MPC wallet provided by an institutional-grade custodian. This wallet is collaboratively managed by OpenDelta, the custodian, and the exchange where the positions are traded. This means that users' collateral funds are never held by a single party and are never held directly on an exchange.

Instead, OpenDelta utilizes a system called off-exchange settlement. Once collateral funds are deposited into the MPC wallet, the exchange credits those funds for trading. OpenDelta and the exchange engage in periodic settlement of PnL, but we are never required to hold the funds directly on the exchange. As a result, collateral can still be recovered by OpenDelta and the custodian in the case of an exchange outage, hack, or other failure. This system also means that OpenDelta itself cannot singlehandedly take control of funds. Funds are held securely in an MPC wallet for the duration of the OPB lifecycle. OpenDelta's automated risk engine and infrastructure ensure that positions are distributed across various exchanges and can be entered into and wound down with minimal slippage.

OpenDelta also operates an insurance fund that pays funding when rates are negative. This means that users who hold OPB only receive positive interest.

Features of OPB

Protected Principal

The position backing OPB consists of BTC collateral that's perfectly hedged– the position remains stable in dollar terms even as the BTC price fluctuates. Users have downside protection on their capital and earn any positive yield.

No Staking or Lockups Required

OPB leverages Solana's native interest-bearing token extension, so yield accrues automatically without requiring staking or lockups. This makes OPB an extremely efficient asset that can be easily and seamlessly utilized on-chain. Users benefit from a simple transferable asset that remains liquid while still earning yield.

Sustainable, Market-Driven Yield

Bitcoin derivatives markets are some of the largest and most liquid markets in all of crypto. These markets, via the funding rate, produce one of the most consistent and sustainable sources of yield available. Funding rates vary based on market conditions, but historical analysis shows them to be positive more than 70% of the time in Bitcoin.

Easily Accessible On-Chain

Yield from the Bitcoin market funding rate has previously been unavailable to many investors because it requires highly liquid derivatives markets and sophisticated risk management strategies. OpenDelta manages these operations in a trust-minimized way and bridges the products on-chain to make them easily accessible.

Trust Minimized

OpenDelta's entire infrastructure stack is designed to minimize counterparty risk and maximize security. We utilize MPC wallet custody, off-exchange settlement, and spread positions across multiple exchanges. We also operate an insurance fund to pay negative funding.

Bitcoin Collateral

The positions backing OPB utilize BTC as collateral. BTC is the hardest collateral asset with the deepest and most liquid markets. Utilizing Bitcoin allows us to tap into these markets to access the best yield and the most sustainable growth.

Powered by Solana

OPB lives on-chain on Solana, the fastest and most performant platform for smart contracts and tokenization. OPB will be directly integrated into the largest and most important Solana infrastructure, DeFi, and applications. Users will be able to take full advantage of Solana's speed, efficiency, and composability to utilize OPB across the Solana ecosystem.

OPB is currently in beta and will go live on-chain later this summer. To learn more about OPB, visit our website and browse our documentation.

If you're interested in minting OPB, please get in touch.

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