Backwardation
A futures-curve state where forward prices < spot — typical during stress when shorts pay longs to hold positions.
When funding flips negative, basis-trade strategies (short perp + long spot) bleed cash. Sustained backwardation is the principal first-order risk to synthetic-dollar designs like USDe.
Related terms
- ContangoA futures-curve state where forward prices > spot — typical for crypto perps when funding is positive.
- Basis tradeLong spot + short perpetual (or futures) to harvest the funding-rate differential, structurally close to delta-neutral.
- Funding rateA periodic payment between long and short perp holders that anchors perpetual price to spot.