Return generation

This section details how Noon generates return for our users

Noon generates returns by deploying the collateral received via the minting process to a basket of delta neutral strategies.

First, our traders select a basket of delta-neutral strategies which meet our criteria:

• They generate top-tier returns across market conditions

• They have sufficient capacity, allowing us to deploy capital at scale

• Deployment can be automated

• Any trading, operational, technological or other risks arising from deployment can be mitigated

We will constantly review this list of strategies, and bring the best into our ecosystem to maximise protocol returns for our users.

Once we have selected our strategies, we intelligently allocate to them based on a variety of factors like historic returns / volatility, current market conditions, market forecast, technical signals, etc. We regularly review our allocation strategy and optimise capital deployment to maximise revenue.

Noon intelligently allocates between 2 strategies:

1. Cash and carry trade, or Funding rate arbitrage: Our algorithms will buy the spot (long) and sell the perpetual future (short) of highly liquid crypto currencies (e.g., BTC) to build delta-neutral positions that earn us the perpetual future funding rate

2. Tokenised Treasury Bills: We use on-chain protocols that tokenise US treasury bills to buy short term US Treasury Bills and collect the interest rate

New strategies are being introduced, in which, the community will get to vote for in Noon's governance forum.