Basis Trade
An arbitrage strategy exploiting the price difference between spot and futures/perpetual markets.
In-Depth Explanation
When perps trade above spot (positive funding), traders can long spot + short perps to earn funding while remaining delta-neutral. This 'cash and carry' trade captures the basis (spread between spot and futures). Basis trades offer relatively stable yields but require active management and carry smart contract and exchange risk.
Related Terms
Funding Rate
Periodic payments exchanged between long and short positions in perpetual futures to keep prices anchored to spot.
Perpetual Futures
PerpsFutures contracts with no expiration date that track an underlying asset's price through a funding rate mechanism.
Arbitrage
Profiting from price differences of the same asset across different markets or venues.
More in Yield
View all →Mercenary Capital
Capital that moves between protocols purely to chase the highest incentives, with no loyalty or long-term commitment.
Annual Percentage Yield
APYThe annualized return on an investment accounting for compound interest.
Annual Percentage Rate
APRThe annualized return on an investment without accounting for compounding.
Real Yield
Yield derived from actual protocol revenue and economic activity, not token emissions or inflation.