Solution Overview
The concept of contango in market trading is crucial for understanding how Bond Hive optimizes its yield bearing token issuance strategies. Contango occurs when:
Future price of a commodity is higher than the spot price
Traders expect the commodity’s price to rise over time
Entering Delta Neutral Strategy - Automated Workflow
Bond Hive leverages contango market condition to structure profitable investments. We do it for user by:
Selling futures contracts
While simultaneously buying the underlying asset in spot at its current price
Thereby securing a guaranteed profit from the difference. If this position is maintained until maturity, at which point the prices converge, allowing investors to realize a profit from the difference.
Sustainability of Yields
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