> ## Documentation Index
> Fetch the complete documentation index at: https://docs.aarc.xyz/llms.txt
> Use this file to discover all available pages before exploring further.

# Yield Strategy

> How BTCY generates BTC-denominated yield

BTCY generates yield through exposure to the Starboard Sygnum BTC Alpha Fund (SSBAF), a market-neutral arbitrage strategy.

## Strategy Overview

The underlying strategy employs market-neutral arbitrage across cryptocurrency markets:

| Strategy Component         | Description                                                   |
| -------------------------- | ------------------------------------------------------------- |
| **BTC/ETH Basis Trades**   | Exploiting price differences between spot and futures markets |
| **Funding Rate Arbitrage** | Capturing funding rate differentials in perpetual contracts   |
| **Cross-Asset Arbitrage**  | Identifying and exploiting price inefficiencies across assets |

The strategy is managed by Starmark Investment Management Limited (FCA-regulated) using the market-neutral approach developed and operated by Starboard Digital Strategies SA (Athens) since March 2021. The Starboard Sygnum BTC Alpha Fund (SSBAF) vehicle itself launched in October 2025. References to strategy experience prior to October 2025 relate to the manager’s operation of substantially similar market-neutral approaches and are not a representation of iBTCY or SSBAF performance. Past performance is not indicative of future results.

## Portfolio Allocation

| Allocation                          | Target | Purpose             |
| ----------------------------------- | ------ | ------------------- |
| **Starboard Sygnum BTC Alpha Fund** | 68%    | Yield generation    |
| **Instant Liquidity Buffer**        | 32%    | Instant redemptions |

<Info>
  The 32% buffer is the cost of instant liquidity. It creates yield drag compared to a fully-invested structure but enables instant redemption capability subject to buffer capacity and limits.
</Info>

## Yield Math

Net yield to investors flows through as follows:

| Component                              | Contribution |
| -------------------------------------- | ------------ |
| SSBAF target return (net of fund fees) | 8-10%        |
| × Allocation to SSBAF                  | 68%          |
| = Yield from SSBAF component           | 5.4-6.8%     |
| Liquidity buffer (earns nothing)       | 32%          |
| − Platform fee                         | 0.50%        |
| **Approx. net yield to investor**      | **\~4-6%**   |

## Why Market-Neutral?

Market-neutral strategies aim to generate returns independent of market direction:

* **Not dependent on BTC price going up**
* **Seeks to profit in both bull and bear markets**
* **Targets consistent returns with low volatility**

This makes the strategy fundamentally different from lending or staking yields, which often correlate with market conditions.

## Single Strategy Concentration

<Warning>
  All of iBTCY’s yield-generating allocation is committed to a single strategy (SSBAF), approximately 68% of total NAV, with the remaining 32% held as an instant liquidity buffer earning no yield. There is no diversification across yield strategies.
</Warning>

**Why this choice:**

We deliberately chose concentration over diversification at launch. A single high-quality institutional yield source with:

* Regulated custody (FINMA-licensed Sygnum)
* Transparent reporting
* Genuine BTC-denominated returns

is preferable to spreading across multiple unproven or lower-quality strategies.

**Risk acknowledgment:**

Single-strategy concentration means performance depends entirely on SSBAF. If SSBAF underperforms, suspends, or closes, there is no diversification benefit.

**Future path:**

Additional yield sources may be added in the future, subject to meeting the same institutional standards and with advance notice to investors.

## Leverage

<Warning>
  SSBAF may employ leverage up to 5x NAV as part of its market-neutral strategy. Leverage amplifies both gains and losses. In adverse scenarios, leverage can cause losses to exceed expectations for the underlying position size.
</Warning>

While leverage is standard for arbitrage strategies and enables the target returns, it also amplifies potential losses. The strategy's risk controls include:

* Position limits
* Stop-losses
* Daily risk monitoring

## Yield Compression Risk

SSBAF's returns come partly from basis trades, the spread between spot and futures prices.

If crypto derivatives markets become more efficient over time, these spreads may compress. Historical basis spreads have ranged from 5-20% annualized.

In some historical periods with compressed spreads, similar market-neutral approaches have reported positive returns. That is **not** a guarantee for SSBAF or iBTCY. A structurally lower basis would reduce SSBAF's returns and, consequently, iBTCY's yield.

<Card title="Key Risks" icon="triangle-exclamation" href="/legal/risks">
  Understand the risks including single strategy concentration
</Card>

***

<Note>
  Available only to eligible professional/qualified investors on an invite-only basis, subject to onboarding and compliance approval. For informational purposes only and not investment advice. Not an offer to the public or a solicitation where unlawful. No retail distribution. Not available to US Persons.

  [Disclaimers](/legal/disclaimers) · [Platform and issuer](/legal/platform-legal)
</Note>