How Does Aegis Work?
Aegis creates YUSD, a Bitcoin-backed stablecoin that earns yield through delta-neutral funding rate arbitrage using BTC COIN-M perpetual contracts. With $39M TVL and $2M in pre-seed funding, its C grade reflects the early-stage nature of the protocol, centralized custodial dependency, and the use of less liquid COIN-M perpetuals compared to established competitors like Ethena.
TVL
$36M
Sector
Stablecoin
Risk Grade
C
Value Grade
D-
Core Mechanisms
1.4.3
NovelYUSD Bitcoin-backed stablecoin using COIN-M perpetual delta-neutral hedging
Similar to Ethena USDe but uses BTC rather than ETH, with COIN-M (coin-margined) perpetuals rather than USDT-margined
2.2.1
NovelWeekly yield distribution to YUSD holders without staking requirements
No-lockup yield model where all holders can claim rewards every 7 days - novel approach removing staking friction but also removing capital commitment
6.4.1
CEX price feeds for delta-neutral position management
Relies on CEX prices for managing perpetual positions
2.3.2
Off-chain custody via premier custodians with real-time transparency dashboard
Custodian-managed assets with on-chain transparency reporting
7.3.1
Aegis Genesis points program for early adopters
Standard points-based early adopter incentive program
How the Pieces Interact
BTC collateral is held by external custodians and traded on centralized exchanges. Simultaneous failure of custodian and exchange could result in total loss of YUSD backing with no on-chain recourse.
COIN-M perpetuals have less liquidity than USDT-margined perpetuals. During sustained negative funding, the protocol pays funding fees that erode YUSD backing, and limited COIN-M depth makes unwinding positions expensive.
Without staking requirements, all YUSD holders can redeem simultaneously. A yield disruption could trigger mass redemptions faster than the protocol can unwind delta-neutral positions, causing a depeg.
Transparency dashboard shows reported positions but users cannot independently verify CEX positions. Discrepancy between reported and actual positions could exist without detection.
Points incentives attract mercenary capital that may exit rapidly after token generation, creating sudden TVL decline and liquidity stress.
What Could Go Wrong
- YUSD is backed by Bitcoin spot plus COIN-M perpetual contracts in a delta-neutral strategy. Unlike Ethena which uses ETH, BTC COIN-M perpetuals have different funding rate dynamics and lower liquidity, creating higher basis risk during volatile periods.
- Custodial counterparty risk is central to the protocol. BTC is held by external custodians and traded on centralized exchanges. A custodian compromise or exchange failure could result in loss of backing assets.
- The protocol distributes yield without staking or lockups, meaning there is no buffer of committed capital during stress events. All YUSD holders can exit simultaneously, creating potential for bank-run dynamics.
- Very early stage with only $2M pre-seed funding and limited operational history. The delta-neutral BTC strategy has not been tested through a full market cycle.
COIN-M Funding Rate Squeeze with No-Lockup Bank Run
ElevatedTrigger: BTC COIN-M perpetual funding rates turn negative and remain below -0.03% per 8h for 14+ consecutive days, while BTC price drops more than 15%
- 1.BTC COIN-M perpetual funding rates flip deeply negative during bear market — Aegis delta-neutral positions begin paying funding rather than earning, eroding YUSD backing by 0.5-1% per week
- 2.Weekly yield distribution drops to zero, signaling backing deterioration — Without staking lockups, YUSD holders immediately begin redemptions
- 3.Mass redemptions force unwinding of COIN-M perpetual positions in illiquid markets — Slippage on COIN-M unwinds causes additional losses, deepening the backing gap
- 4.YUSD breaks $1 peg on secondary markets as remaining holders race to exit — YUSD trades at $0.90-0.95 with remaining holders absorbing the accumulated losses
Risk Profile at a Glance
Overall: C (45/100)
Lower score = safer