As crypto markets evolve, DeFi protocols continue to explore new methods of delivering yield while minimizing user risk. One of the most widely adopted strategies is delta-neutral yield earning, where a long spot position is hedged with a short perpetual futures position. Although many protocols use this structure, not all implementations are equally safe.

At Aegis, we’ve made a deliberate choice that sets us apart. We use COIN-Margined (COIN-M) futures instead of the more commonly used USD-Margined (USD-M) futures to hedge our BTC exposure. This is not a technical nuance, but a foundational decision rooted in risk mitigation. Our approach prioritizes resilience in volatile conditions and avoids systemic risks linked to stablecoins.

Understanding COIN-M vs USD-M Futures

Both COIN-M and USD-M futures are popular instruments used for hedging or speculation. However, the key difference lies in how they are margined and settled.

• USD-M Futures are collateralized and settled in stablecoins, typically USDT or USDC. If a protocol opens a BTC short using USD-M futures, all profits, losses, and margin requirements are handled in a stablecoin.

• COIN-M Futures are collateralized and settled in the underlying asset, such as BTC. This means positions are opened and closed using BTC itself, without relying on stablecoins at all.

While both allow for delta-neutral positioning, using USD-M futures introduces significant external risk tied to the stability of the collateral currency. COIN-M futures eliminate this dependency.

The Hidden Dangers of Stablecoin-Based Collateral

Stablecoins are a foundational layer of DeFi, but they still carry fundamental risks. Past events have exposed just how vulnerable protocols can be when built around stablecoin collateral.

In March 2023, USDC lost its dollar peg following the collapse of Silicon Valley Bank. At one point, it traded as low as $0.87, causing widespread panic across protocols using USDC for collateral or settlement. Similarly, USDT has depegged multiple times, most notably in May 2022, when it fell to $0.95.

These depeg events may seem temporary, but they can be catastrophic when leveraged positions rely on these stablecoins. Margin calls, liquidations, and mispriced PnL can cascade quickly during moments of market stress.

Some protocols that rely on USD-M futures are exposed to this risk by design. Their collateral and hedge positions are fully dependent on the stability of centralized assets, which may be vulnerable to regulatory actions, bank failures, or liquidity crunches.

Why Aegis Uses COIN-M Futures

Aegis takes a different path by using COIN-M futures. All collateral and hedging activity occurs in BTC, removing any reliance on stablecoins.

This model offers several important advantages:

• Eliminates stablecoin exposure. There are no stablecoin counterparty risks, affecting collateral or hedge positions.

• Simplifies risk and settlement. All activity is denominated in BTC, a highly liquid and decentralized asset.

• Enhances transparency and auditability. There are fewer moving parts, making the system easier to monitor and validate.

In short, Aegis offers a delta-neutral strategy that avoids the vulnerabilities of third-party stablecoins. This allows us to maintain a more resilient and self-contained protocol architecture.

A Stronger Foundation for DeFi Yield

Delta-neutral yield strategies are powerful tools, but they must be implemented with care. Relying on assets that can break under stress puts user funds at unnecessary risk.

By choosing COIN-M futures, Aegis delivers yield while staying rooted in the most secure and decentralized asset available - Bitcoin. We avoid the fragility introduced by stablecoins, and instead offer a system that can withstand market volatility and maintain long-term sustainability.

This is not just a technical decision. It is a reflection of our broader commitment to building safe, transparent, and future-proof financial infrastructure.