DUSD, DETH, and DBIT Machine Update, Week 28-29

This report covers the performance and positioning over the past few weeks of DUSD, DETH, and DBIT. Inside, you will find a clear view of performance drivers, allocation shifts, and risk management decisions across each Machine.

Over the past two weeks, the DUSD Machine, which executes Meccanico’s proprietary USD strategy on the Makina Protocol, generated an annualized yield of approximately 4.92% on Meccanico’s deployed capital. The slightly lower returns are explained by the execution costs from closing the remaining concentrated loops.

Other major changes included the closure of the 3Jane USD3 senior tranche and the Sentora PYUSD vault and rotation into a new position: USDG on Aave V4. In addition to that, the DUSD Machine increased its exposure to the Pareto FalconX position and allocated to the 3Jane Morpho ecosystem position which is heavily incentivized and offers better risk-adjusted returns compared to 3Jane’s senior tranche.

In parallel, integration work continued around Monad, with updates rolled out to support the Machine’s expanding deployment there.

Taken together, the period’s changes continue the deliberate rotation of the Machine’s positions towards real-world-asset (RWA) yield sources with its private credit RWA exposures while retaining ample liquidity throughout.

The DETH Machine’s proprietary ETH strategy on the Makina Protocol generated the following results over the last period, generating an annualized yield of approximately 4.10% on Meccanico’s deployed capital. This represents a notable increase from the 3.0% recorded in the previous period. The on-chain price of the Machine Token set by the relevant smart contract moved from 1.014724 to 1.016321 WETH/DETH over the period, alongside a TVL of approximately 2,662 WETH. This performance underscores the strategy, which prioritizes captured spreads over broader market beta.

Operational efficiency within the engine continues to improve. The primary leveraged wstETH/ETH loop successfully capitalized on easing ETH borrowing costs to capture wider spreads. Furthermore, diversification efforts are progressing according to plan; a carry sleeve was initiated during this window, and the DQaeETH arbitrage allocation is now fully deployed. These additions reduce reliance on individual positions, developing the Machine into a more resilient yield engine.

The Machine’s 30-day trailing yield is approximately 3.49% on Meccanico’s deployed capital, with a current run rate in the mid-3% range. Meccanico anticipates that some of the more recently added yield drivers have yet to contribute fully, subject to operational and market conditions and ongoing risk assessment; the carry sleeve is still in its early ramping phase, and the DQaeETH ending has been optimized further to capture better spreads.

No major changes have occurred in the DBIT Machine, which executes Meccanico’s proprietary wBTC strategy on the Makina Protocol (annualized yield of approximately 1.28% on Meccanico’s deployed capital in the first half of July), with the Machine’s positions still concentrated in the Across LP pool, which currently offers a positive risk-adjusted wBTC yield profile.

Machine Tokens (DUSD, DETH, DBIT) are products sold by Dialectic Meccanico Ltd. (BVI) as principal seller for its own account and are issued by the relevant Machine smart contract on the Makina Protocol; they are not deposits, fund interests or participations in a collective investment scheme, and Meccanico operates each Machine with its own capital rather than managing assets for Machine Token holders.

The Machine Tokens are sold “AS IS, WITH ALL FAULTS”, their value may fall to zero, and there is no redemption right, as any Buyback is made at Meccanico’s sole discretion and may not occur; no value, return or performance is guaranteed, and past strategy performance is not indicative of future strategy performance.

This material is informational only, is not part of the applicable Makina terms and/or Dialectic Meccanico Ltd. (BVI) Operator Terms, and is not investment, tax or legal advice or any recommendation, solicitation, endorsement or offer to acquire, hold or dispose of any Machine Token, or acquire, hold or dispose of any investment product, vehicle, service or instrument.