Delta-neutral crypto strategies
Updated by the Circuit team
What delta-neutral means
Delta is how much a position gains or loses when the price moves by $1. A long of 1 BTC has a delta of 1 BTC. A short of 1 BTC has a delta of minus 1 BTC. Hold both and the total delta is zero: a price move makes one leg and costs the other the same amount.
A delta-neutral position makes no money from direction. It earns from something else that the hedge doesn't cancel. In crypto that is usually perp funding, sometimes a basis between the perp and spot price, and sometimes yield on the spot leg. The glossary defines the terms used here.
Spot plus short perp
The standard construction holds the asset and shorts the same amount of its perpetual future.
| Leg | Position | What it does |
|---|---|---|
| Spot | Buy 0.125 BTC | Gains when BTC rises |
| Perp | Short 0.125 BTC | Loses when BTC rises, and receives funding when longs pay |
| Combined | Net zero BTC | Price moves cancel, funding remains |
Size the legs by coin amount. If the spot leg is 0.125 BTC, the short is 0.125 BTC. Dollar values then move together.
On Circuit both legs can sit on Hyperliquid, which has spot markets and perps in the same account. The spot leg can also be a token bought through a swap on any of Circuit's networks, such as BTC wrapped on Base or ETH on Arbitrum, with the short on Hyperliquid or Lighter. Keeping both legs on one venue makes rebalancing simpler because the bot reads and moves everything in one place.
Where the return comes from
Funding. Perps stay near spot through funding. When the perp trades above spot, longs pay shorts every hour on Hyperliquid and Lighter. The short leg collects it. As of October 2026 both venues use a baseline of 0.01% per 8 hours, or 0.00125% per hour, that longs pay shorts whenever the premium is small (Hyperliquid, Lighter). That baseline annualizes to 0.00125% × 24 × 365 = 10.95% of the short's notional.
Funding is not fixed. Ethena, which backs part of its USDe with this trade, reports that ETH perp funding returned 16% in 2021, 0.6% in 2022, about 9% in 2023 and about 13% in 2024 on an open-interest-weighted basis (Ethena docs). The 2022 number is the one to remember. A delta-neutral book can earn almost nothing for a year.
Basis. If the perp trades above spot when you enter, the short sells higher than the spot buy. Say spot BTC is $80,000 and the perp is $80,080, a 0.1% basis. On 0.125 BTC that is 0.125 × $80 = $10 captured if the two prices converge. Perps never expire, so convergence isn't guaranteed, and the basis can widen against you while you hold.
Spot yield. If the spot leg can earn on its own, for example ETH lent or staked, that yield adds to funding. The stablecoin yield guide covers how bots move capital between lending rates.
A worked example
A bot starts with $16,000 and BTC at $80,000. It buys 0.125 BTC on Hyperliquid spot for $10,000, shorts 0.125 BTC of the perp at 2x isolated margin with $5,000, and keeps $1,000 of USDC as a margin reserve. Fees use Hyperliquid's base tier as of October 2026: 0.07% spot taker and 0.045% perps taker (fee schedule).
| Item | Math | Result |
|---|---|---|
| Spot buy fee | $10,000 × 0.07% | $7.00 |
| Perp short fee | $10,000 × 0.045% | $4.50 |
| Round trip, entry and exit | 2 × ($7.00 + $4.50) | $23.00 |
| Funding at baseline 0.00125% per hour | $10,000 × 0.00125% | $0.125 per hour |
| Per day | $0.125 × 24 | $3.00 |
| Per year | $3.00 × 365 | $1,095 |
| Return on $16,000 | $1,095 ÷ $16,000 | 6.84% a year |
| Days to cover fees | $23.00 ÷ $3.00 | 7.7 days |
At a higher rate of 0.005% per hour, the short collects $0.50 an hour, $12 a day and $4,380 a year, which is 27.4% on $16,000. Fees are covered in $23 ÷ $12 = 1.9 days.
Price doesn't matter while the hedge holds. If BTC rises 20% to $96,000, the spot leg gains 0.125 × $16,000 = $2,000 and the short loses the same $2,000. The account value is unchanged before funding and fees. But the short's isolated margin fell from $5,000 to $3,000, and that matters.
The short leg can still be liquidated
A hedged position can still lose money when one leg is liquidated and the other is left naked. The spot leg can't be liquidated. The short perp can.
Hyperliquid sets maintenance margin at half the initial margin at an asset's maximum leverage (liquidations). BTC's maximum is 40x as of October 2026, so maintenance margin is 1.25%. An isolated short is liquidated near entry × (1 + 1/leverage) ÷ (1 + 0.0125), before fees and funding.
| Short leverage | Math from $80,000 | Liquidation price | Move to liquidation |
|---|---|---|---|
| 1x | $80,000 × 2 ÷ 1.0125 | $158,025 | +97.5% |
| 2x | $80,000 × 1.5 ÷ 1.0125 | $118,519 | +48.1% |
| 3x | $80,000 × 1.3333 ÷ 1.0125 | $105,350 | +31.7% |
| 5x | $80,000 × 1.2 ÷ 1.0125 | $94,815 | +18.5% |
In the example, after BTC rises to $96,000 the 2x short's liquidation price is still $118,519, only 23.5% away instead of 48.1%. Adding the $1,000 reserve as isolated margin moves it to about $126,420, 31.7% above $96,000. Without a top-up, a further rally liquidates the short. The spot leg is then an unhedged long BTC position, and Hyperliquid keeps the maintenance margin in a backstop liquidation.
Assets with lower maximum leverage carry higher maintenance margin. On a 10x asset it is 5%, which pulls every liquidation price closer. The asset pages list which perps public bots trade.
Rebalancing
A delta-neutral bot has two jobs after entry: keep the legs equal and keep the short away from liquidation.
- Margin top-ups. When the short's margin falls below a threshold, say 60% of where it started, add margin. On Circuit a bot can add or remove isolated margin on an open Hyperliquid or Lighter position as its own operation.
- Rebalance from gains. When price rises, the spot leg is worth more. Sell a slice of spot and reduce the short by the same coin amount, then use the USDC as margin. The hedge stays equal and the cushion grows.
- Drift limits. Fills, fees and funding make the legs drift apart. Rebalance when they differ by more than a set share, such as 2% of notional.
- Exit rules. Close both legs when funding stays below the cost of holding for a set time, such as 24 hours under 0.0015% per hour, or when the short comes within a set distance of liquidation.
Every rebalance pays fees. A bot that rebalances on every small move can spend more on fees than it earns in funding. Thresholds in percent of notional keep it calm.
Variations
- Cross-venue funding spread. Short the perp where funding is high and long it where funding is low, for example Hyperliquid against Lighter. Both legs are perps, so both can be liquidated. The funding rate scanner guide works through it.
- Funding fade. Short only when funding is extreme, without a spot hedge. That is a directional bet, covered by the funding rate short strategy.
- Papertrade hedged pairs. Opening a long and a short of the same asset on Papertrade is delta-neutral, but Papertrade has no funding. Those bots earn PAPER from losing closes instead, explained in the Papertrade guide.
Build it on Circuit
A spec for the Terminal:
"Start with my USDC on Hyperliquid. Buy BTC on Hyperliquid spot with 62.5% of it, and short the same BTC amount on the BTC perp at 2x isolated margin. Keep the rest as a reserve. Every hour, read the funding rate. If the short's margin drops below 60% of its starting amount, add margin from the reserve. If the spot and short sizes differ by more than 2%, trade the smaller gap back to equal. Close both legs if funding has been below 0.0015% per hour for 24 hours, or if BTC is within 15% of the short's liquidation price. Log funding received every hour."
The Builder writes the code, checks it, and shows each setting. Backtests on Circuit replay perp orders but fail spot orders, so test the full two-leg bot in paper trading, where spot and perp orders both fill against the live book with Hyperliquid's fees, funding and liquidation rules.
Keys and permits
Bots run on a wallet you create in Circuit or import by private key. Circuit keeps the signing key in a hardware enclave, and bots never see it. A bot requests typed actions through Circuit's SDK, and Circuit signs only under the permit you sign with your passkey when you start the bot.
You can export the private key from Settings at any time. Pause, resume or stop any bot whenever you want. Stopping leaves your positions and resting orders in your account, and you close them from Terminal.
What it costs
Circuit charges no fees today and adds no builder fee to Hyperliquid or Polymarket orders. You pay the venue's trading fees, network gas and any bridge or routing fees, and each prepared action's review shows the costs it reports before you confirm. Today's terms make no commitment about future fees.
FAQ
What is a delta-neutral strategy in crypto?
A position whose gains and losses from price moves cancel out, most often spot holdings plus an equal short in the perpetual future. It earns from funding, basis or spot yield instead of direction.
Is delta-neutral trading risk-free?
No. Funding can turn negative so the short pays, the short leg can be liquidated in a sharp rally, fees can exceed funding, and venue or smart contract failures affect both legs. Ethena reports ETH funding of only 0.6% for all of 2022.
How much does a delta-neutral funding trade earn?
It depends on funding. At Hyperliquid's baseline of 0.00125% per hour, the short earns 10.95% a year on its notional. In the worked example with $16,000 of capital that is $1,095 a year, or 6.84%, before fees.
What leverage should the short leg use?
Lower leverage moves liquidation further away. On BTC with 1.25% maintenance margin, an isolated short at 2x is liquidated about 48% above entry, and at 5x about 18.5% above entry, before fees and funding.
Can I backtest a delta-neutral bot on Circuit?
Partly. Backtests replay perp orders on recorded Hyperliquid and Lighter markets with hourly funding, but spot orders fail in a backtest. Test the full spot and perps bot in paper trading on live markets.