As stablecoin regulation tightens and tokenized markets evolve toward stricter capital requirements, Axis is betting that the next era of crypto yield will come from infrastructure inefficiencies rather than leverage.
Jimmy Xue, COO and co-founder of Axis, said the protocol is built around a trading stack refined over seven years in proprietary quantitative markets.
That stack, once deployed within a prop desk that later became a regulated hedge fund in Singapore, is now being transitioned into a protocol-native product.
“At the heart of the strategy is cross-venue and cross-asset arbitrage,” Xue said in an interview with Yellow.com.
Axis monitors millions of price combinations across centralized exchanges and regional venues.
When discrepancies appear, for example between Binance and OKX, the engine executes simultaneous trades to capture the spread.
The system can send multiple trades per second, typically in smaller order sizes, targeting annualized returns in the 10% to 20% range.
Unlike lending platforms or funding-rate strategies, Axis’ model does not depend on directional exposure.
Instead, it relies on structural fragmentation across venues and currencies.
Arbitrage In A Capital-Constrained Market
Xue argued that tokenization and regulatory clarity, particularly around stablecoins, bring trade-offs.
Instant settlement reduces counterparty risk and increases transparency.
But it also removes elements of capital efficiency embedded in traditional finance, such as intraday credit and internal netting.
“T+2 is not just a bug,” he noted, referring to conventional settlement cycles.
In legacy markets, delayed settlement allows market makers to recycle capital across trades.
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Moving to fully pre-funded, real-time settlement shifts the burden onto balance sheets.
In that environment, liquidity provision becomes less about credit underwriting and more about inventory routing, positioning capital precisely across exchanges and jurisdictions.
That shift, Xue said, creates structural arbitrage opportunities.
Regulation And Fragmentation
As jurisdictions such as Hong Kong introduce stablecoin licensing frameworks and reserve requirements, Xue expects second-order effects on capital efficiency.
Reserve-backed models improve trust but increase balance sheet intensity.
Liquidity providers must pre-fund more aggressively, raising the opportunity cost of capital.
Axis views this fragmentation, across exchanges, currencies and regulatory regimes, as a core source of yield.
The protocol also incorporates cross-asset arbitrage, including crypto-FX opportunities where assets such as Bitcoin (BTC) are quoted against multiple fiat currencies.
Price differences across regions can create synthetic FX spreads that the system captures in real time.
Transparency And Risk
Xue acknowledged that proof-of-reserves initiatives represent progress but cautioned that they are not equivalent to full solvency transparency.
“Proof of reserves is different from proof of solvency,” he said, noting that liabilities often remain off-chain and harder to verify comprehensively.
In his view, the industry remains in what he described as an “unbundling phase” of tokenized finance.
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