# BOND perpetuals
#### **1. Overview**
**BOND** and **TLT Perpetuals** are on-chain structured rate instruments that bring **real-world bond markets** into the **BasisX perpetual framework**.\
They allow traders to hedge or speculate directly on the **price movements of tokenised bond ETFs** such as **BND (Vanguard Total Bond Market ETF)** and **TLT (iShares 20+ Year Treasury Bond ETF)**.
These perpetuals are **linear contracts**, margined and settled in **USDC**.\
The oracle is denominated in **USD**, and no USDC/USD conversion is applied.\
Economic exposure is therefore **quanto in USD**, with P\&L cash-settled in USDC.
All BOND and TLT perpetuals are currently **isolated-margin only**; cross-margin support will be added in future HIP-3 upgrades.
Both instruments are listed on the **BasisX HIP-3 deployment**, where **matching, order types, funding, liquidation, and ADL logic** are managed by **HyperCore**.\
The **oracle price** and **mark price** are bespoke **BasisX components**, and the **BasisX relayer** publishes oracle and mark price updates approximately **every 3 seconds**.
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#### **2. Mark Price**
The **mark price**—used for margining, liquidations, stop/limit triggers, and unrealized P\&L—is defined as the median of three components:
1. The **Bond Oracle Price** (see Section 3).
2. The sum of the oracle price and a **150-second exponentially weighted moving average (EWMA)** of the difference between the perpetual’s mid-price and the oracle price.
3. The median of **best bid, best ask, and last trade prices**.
At each tick, the **BasisX relayer** publishes (1) and (2).\
The **Hyperliquid protocol** computes (3) and takes the **median of all three** to form the final mark.
**This ensures:**
* Mark stability
* Manipulation resistance
* Smooth convergence between market and oracle valuation
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#### **3. Oracle Price — Oracle BOND & TLT Feeds**
The **oracle** provides the pricing reference for both **funding** and **mark price** calculations.
For **BOND** and **TLT** perpetuals, the oracle anchors directly to **Pyth Network’s institutional-grade real-time price feeds** for bond ETF assets:
* **BOND/USD (Vanguard Total Bond Market ETF)**\
Oracle Feed – Equity.US.BND/USD
* **TLT/USD (iShares 20+ Year Treasury Bond ETF)**\
Oracle Feed – Equity.US.TLT/USD
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**External Pricing**
During active market sessions (e.g., NYSE trading hours), the oracle consumes price data for the underlying bond ETF directly from **Oracle's Network**, which aggregates verified institutional sources.
Each new oracle update is transmitted by the **BasisX relayer** to the on-chain HIP-3 deployment as the oracle price:
**S****t**** = OraclePrice****BOND/USD or TLT/USD**
The oracle updates at sub-minute frequency, ensuring BasisX remains synchronized with real-world bond price movements.
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**Internal Pricing (Off-Market Hours)**
When external updates are unavailable (e.g., weekends, holidays, or temporary feed outages), the oracle advances via a **continuous-time exponentially weighted moving average (EMA)** to maintain pricing continuity.
**S****t**** = β****t**** S****t−1**** + ( 1 − β****t**** ) (S****t−1**** + I P D****t**** )**
where
**β****t**** = e****−Δt/τ** , τ=8 hours
and
**I P D****t****=max ( P****impactBid**** − S , 0) − max ( S − P****impactAsk**** , 0 )**
* **P****impactBid**** / P****impactAsk** : average execution prices for a configured impact notional amount on bid/ask sides.
* If insufficient depth exists on one side, that side’s contribution is set to zero.
When oracle's external pricing resumes, the oracle **instantly re-anchors** to the live feed at the next tick.
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**Mark Price Guardrail**
To mitigate manipulation during inactive sessions, the **mark price** is restricted to remain within **1 / max leverage** of the last externally derived oracle value.\
Example: if **BOND oracle = $75** at NYSE close and max leverage = 10×, the mark price range is constrained to **($67.5 – $82.5)** until external data resumes.
***
#### **4. Economic Exposure**
BOND and TLT perpetuals provide **direct, 24/7 exposure to global fixed-income markets.**
* **Long BOND/TLT** → Profits when bond prices rise (yields fall).
* **Short BOND/TLT** → Profits when bond prices fall (yields rise).
This creates a continuous, crypto-native market for **interest-rate and duration risk**.
***
#### **5. Use Cases**
**1. Hedging RWA Exposure**
* RWA protocols or DeFi treasuries holding tokenised bonds can short **BOND** or **TLT** to hedge against rising yields.
* If yields rise (bond prices drop), the hedge position gains value.
**2. Macro Speculation**
* Long **BOND/TLT** to express a bullish view on bond prices (expecting rate cuts).
* Short **BOND/TLT** to express a bearish view (expecting higher yields).
**3. Cross-Market Rate Arbitrage**
* Arbitrage relative moves between **BOND**, **TLT**, and yield-based perps (e.g., stETH, BTC funding).
* Construct synthetic yield-curve or duration-spread trades directly on-chain.
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#### **6. P\&L Calculation**
PnL is computed linearly as:
**PnL = K × N × ( P****t**** − P****entry****)**
where
* K=$1
* N= position notional in USD
* Pt=St ( oracle or mark price )
This ensures consistent, transparent payoff behaviour aligned with other HIP-3 markets.
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#### **7. Safety Parameters**
* Oracle and mark updates constrained by **±1% per tick** HIP-3 limit.
* EMA fallback ensures smooth continuity during off-hours.
* Mark deviation limited to **1 / max leverage** of last valid external oracle.
* Cross-margin and advanced collateral models to be added in upcoming BasisX releases.
***
#### **8. Summary**
**BOND** and **TLT** perpetuals extend **BasisX** into **real-world interest-rate markets**, powered by **our oracle's institutional price feeds.**\
They allow traders to **hedge, speculate, and arbitrage bond prices** 24/7 — bridging TradFi fixed-income and DeFi perpetuals into one unified yield ecosystem.