DeFi Carry Trades

Risk premia harvesting in unusual places, finding outsized yield in places other's aren't looking.

Earlier in the week on twitter, I shared a trade idea using a long perp position to collect funding, and hedging using on chain borrow. Here we will dive deeper into this trade, look at the risks, sizing, execution and how to think about automating.

1. The Trade

2. Risk Premia

   1. What is Risk Premia?

   2. Types of Risks

   3. Why there’s a Premium

3. Understanding Perps

   1. The contract spec

   2. Who’s trading them?

   3. The Dynamics

   4. Risks

4. On-chain borrow

   1. A look at protocols

   2. The Mechanics

   3. Risks

5. Putting it together

   1. Plotting

   2. Analyzing costs

   3. Why and When to hedge

   4. Collateral Management

6. Automation

The Trade