Monero Cash and Carry Trade

This is a low risk, 'delta-neutral' trading strategy which is pegged to the dollar and earns yield through funding fees.
Its useful if you consider monero too risky/expensive/volatile to hold at the moment.

The idea is to hold monero, whilst shorting it at the same time, so that you cannot lose money from price fluctuations in either direction. Whereas this might seem utterly pointless, it has advantages:

1. Receive funding fees from traders with leveraged long positions. This was 8.17% on hyperliquid over the past 3 months. You can monitor the history on Coinglass
2. Suspend exposure to the markets but keep (a set dollar value of) real moneroj in your wallet.
3. Low risk in the short term because its pegged to the dollar.

How to do this in practice:

To be truly delta neutral, you will need the same value of monero in your wallet as short contracts. But that doesn't mean the accounts have to be equal. So you have 1 monero. Then you can keep 0.66 and use 0.33 to buy dollars on hyperliquid to collateralize 0.66 xmr worth of shorts. Your net exposure is 0.66 - 0.66 = 0xmr. But there's 0.66 xmr in your wallet and you get paid for funding fees on 0.66 worth of short contracts.
Use trocador to swap xmr <-> eth then bridge to arbitrum to fund hyperliquid.

Risk:

This is labelled 'low risk' because it is pegged to the dollar, but there are still risks to this strategy.

• Firstly, if your short gets liquidated, then you are left with a naked long. You have effectively been forced to buy monero at the worst possible time during a violent pump. To avoid this, its essential to reduce the leverage if the price goes up by sending more monero to hyperliquid and simultaneously reducing your short position to maintain balance.

• Luckily, there is no threat of 'buying high and selling low' but the trouble with rebalancing too frequently is slippage and fees. There is a tradeoff because more leverage means more fees but it also means that you will have to reduce it more frequently. So be careful not to overleverage, and consider waiting for low fees / slippage to swap. Ideally this would be managed by an algorithmic hot wallet with trocador, and hyperliquid integrations.

• Thirdly, funding fees can flip negative if futures are trading under spot, causing the position to lose money. This is a temporary and unstable condition by design and this risk is mitigated by riding it out and waiting for positive funding fees to resume.

• Finally, custody risk. 66% in monero (self custody, low risk), up to 5% moving through trocador (higher risk, custodial swaps partially covered by trocador insurance), 33% on hyperliquid (higher risk, smart contract risk). Also, if your money gets stuck on the swap due to aml then you might not be able to prevent a liquidation in time so always use swaps rated B or higher for privacy on trocador. (I don't understand what sort of person runs a monero swap and holds funds for aml compliance, grow a pair or gtfo)

Why Monero:

They used to do this with bitcoin and other large cap cryptos, but institutional interest is apparently drying up because of low yields. This is because the markets are more efficient and spot/futures arbitrage is more competitive.
Monero is likely much harder for financial systems to access due to inefficient / permissioned cross chain liquidity and regulatory barriers.
But at the same time, Monero is actually an organic market. It is driven by real industrial demand for private transactions, and is a real hard monetary standard with a real future. So there are people betting on its success and its not easy to manipulate like a false market driven by artificial demand. For example, don't try this with a memecoin because they can sustain negative funding fees. Don't try this with some bullshit project like zec because you're not up against an organic market, you're up against a false construct.

Note:

This is not related to my 'Going Short' post. That was about betting on a dump, whereas the strategy in this post does not bet on a pump or a dump. This isn't me backtracking; this is a new and separate opportunity that I hadn't considered before. Not better or worse but different.