BRVX Glossary · Hedging · Updated September 25, 2026
Hedging is opening a position that offsets the risk of another, so that a loss on one is partly or fully balanced by a gain on the other. A holder of an asset might short a future or perpetual on it, or buy a put option, to protect against a fall.
The formula
Hedge size Exposure × Hedge ratio
A ratio of 1 cancels the price exposure; less than 1 only softens it.
How it works
- Exposure Asset you hold
- Offset Opposite position
- Result Smaller net swing
An example
You hold 1 BTC and expect a volatile week. Shorting a BTC perpetual with a notional equal to 1 BTC offsets most of the price move: if BTC falls 10%, the short gains roughly what the holding loses, before fees and funding.
What a hedge costs
A hedge gives up the upside it offsets and has running costs: fees to open and close, funding or financing while it is held, and margin that must be kept to avoid liquidation of the hedge leg.
On BRVX
BRVX perpetuals can be opened long or short on 41 markets, which makes them usable as hedge legs. The cost to hold is funding every hour; per the public API both sides pay it, so a BRVX short hedge costs 0.0171% an hour on BTC/USDT at the current rate, charged on the full notional.
Questions about Hedging
Is hedging the same as reducing risk to zero?
No. A perfect hedge removes price risk but leaves costs, basis differences and the risk of the hedge leg being liquidated.
Is hedging legal?
Yes. It is standard practice for producers, funds and traders.
What is a hedge ratio?
The share of an exposure that the hedge covers, from 0 to 1.
Hedging: next steps on BRVX
Hedging on XAUT/USDT: 0.16% a round trip in fees, 0.0023% per hour funding on a long, about 0.5479 USDT a day per 1,000 USDT.
Read next: Long and short positions, Derivatives and Arbitrage.
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