> For the complete documentation index, see [llms.txt](https://docs.btcd.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.btcd.fi/feature-overviews/protocol-design.md).

# Protocol Design

Protocol revenue derives from three independent, long-term streams tied to our 50% BTC / 50% USD collateral model:

1. Staked Asset Consensus & Execution Layer Rewards - A small portion of BTC collateral is routed into liquid-staking and lending strategies that earn network inflation rewards, execution fees, and MEV capture.
2. Funding & Basis Spread from Delta-Neutral Hedging - The largest revenue component comes from executing delta-neutral trades on perpetual futures markets. By pairing long BTC collateral with equal-notional short futures positions, the protocol consistently captures positive funding rates and basis convergence.
3. Fixed Rewards on Liquid Stables - Idle USD collateral that is not deployed in hedging strategies earns fixed-rate yields through institutional stablecoin programs and short-duration treasury instruments.